Posted in Internet of Things

Are EU regulations on Union-wide roaming services applicable to IoT connectivity services?

Many regulations and related guidelines have been adopted during 2017’s first semester in relation to roaming services. However, it is not very clear whether connected devices and related IoT connectivity services fall within their scope.

Telecom operators providing cross-border roaming services to their end-users have been pretty busy recently navigating between (i) the new guidelines published on March 27, 2017 by the Body of European Regulators of Electronic Communications (BEREC) on Regulation (EU) No. 2016/2286 on roaming retail charges, (ii) the adoption of Regulation (EU) No. 2017/920 dated May 17, 2017 (amending Regulation (EU) No. 531/2012 on wholesale roaming markets), (iii) the subsequent publication by BEREC on June 9, 2017 of new guidelines on Regulation (EU) No. 531/2012 as amended, and (iv) the entry in force on June 15, 2017 of the prohibition of roaming charges for call and SMS termination in the EU (in accordance with Regulation (EU) No. 531/2012 as amended).

These new regulations raise the issue of their scope of application, in particular in terms of stakeholders and services covered. More specifically, concerns have emerged as to whether the IoT sector — including connectivity services providers — should be subject to the ex-ante tariffs regulations applicable to roaming services within the EU

The scope of Regulation (EU) No. 531/201

Regulation (EU) No. 531/2012 (as amended by Regulation (EU) No. 2015/2120 and Regulation (EU) No. 2017/920) does not clearly define its scope of application. In particular, it does not expressly set whether connectivity services for connected devices are subject to its provisions

Nevertheless, Section 15 (4) specifies that the transparency obligations that generally apply to telecom operators in relation to their roaming fees should not apply to “machine-to-machine devices” using mobile data telecommunications

As a consequence, Section 15 (4) seems to imply that, by default, connectivity services for connected devices are subject to Regulation (EU) No. 531/2012 as far as roaming services are concerned

BEREC’s interpretation of Regulation (EU) No. 531/2012: A case-by-case approach depending on the connectivity technolog

Although this clarification is helpful, it does not clarify the exact scope of scenarios and roaming technologies that the Parliament and the Council intended to regulate through Regulation (EU) No. 531/2012

According to the reports and guidelines published by the BEREC, Section 15 (4) should indeed be interpreted “a contrario” as an indication that, by default, Regulation (EU) No. 531/2012 applies to all roaming services including those supporting connected devices

Having said that, BEREC makes some important clarifications which tend to significantly limit this assessment. Indeed, BEREC’s analysis is explicitly based on the assumption that roaming services use 2G / 3G / 4G (or GMS / UMTS / LTE) technologies, which are currently the most widespread standards. In particular, BEREC excludes services using LPWA (low-power, wide-area) technology as it considers that the market is not yet mature enough to consider regulating roaming services based this standard of connectivity

Moreover, in its interpretation of Regulation (EU) No. 531/2012, BEREC distinguishes between different situations in which connected devices might need roaming services. In particular, BEREC distinguishes between periodic (occasional) and permanent roaming, and considers that EU regulations should not apply to connected devices as soon as they are roaming on a permanent basis. More generally, BEREC stresses the need for the EU institutions to regulate connected devices through a case-by-case approach in order to take in account the technical and commercial specifics of all existing scenarios.

What to keep in mind

At this stage, roaming services related to connected devices are covered by EU regulations applicable to international and Union-wide roaming if these services are based on 2G / 3G / 4G mobile technologies

Conversely, there are arguments to support the view that these regulations are not currently applicable to services based on other less widespread connectivity technologies, such as LPWA. However, this conclusion could be overturned in the near future if the Commission were to decide that ex-ante tariff regulation is required for data communications terminations using emerging technological standards, in the light of the new entrants’ and the users’ interests

For further information, please contact Florence Guthfreund-Roland (florence.guthfreund-roland@dlapiper.com) or Mathilde Hallé (mathilde.halle@dlapiper.com).

Posted in Telecoms

The New Electronic Communications Code….but still not actually law

The Digital Economy Act finally became law prior to the dissolution of parliament at the start of the general election campaign. The Act contains within its pages the new Electronic Communications Code, which has been awaited for years and which many argue is essential to ensure the law is equipped to deal with advances in technology.

However, not all of Act’s provisions have come into force immediately and indeed, the new Code will only start to operate once it is brought into effect by regulations made by the Secretary of State. Some regulations (The Digital Economy Act 2017 (Commencement) Regulations 2017) have recently been made, but these do not bring into force the new Code.

In that respect, our recent enquires with the Department for Culture, Media & Sport as to when the Code will become law elicited these responses:

“There are a number of factors to consider, including supporting regulations, Codes of Practice etc. We are considering all aspects of implementation in order to achieve the most swift and appropriate approach, and will update stakeholders on commencement in due course.

We are … bringing into force measures to improve digital connectivity across the UK, starting the implementation of the new electronic communications code to assist operators to develop new infrastructure…in summary we have commenced the code for the purpose of making regulations over the autumn. Once we have those in place full commencement will follow.”

Given the turmoil thrown up by the election result and the more immediate issues the government is facing, including Brexit, the new Code could still be some way off, meaning that the existing Code continues to regulate arrangements for the installation of telecoms equipment.

The new Code introduces (whenever it finally becomes law), inter alia:

  • Rents/compensation: it is thought that the new Code is likely to decrease the rents/compensation received by landowners from telecoms operators as the rents/compensation will be based on the land’s value to the landowner not the operator.
  • Site sharing and assigning: operators will have rights to assign agreements and to share or upgrade apparatus without requiring the consent of the landowner, thus reducing the landowner’s control.
  • Security of tenure: the new Code contains provisions to ensure there is no overlap between the security of tenure rights granted to business occupiers by the Landlord and Tenant Act 1954 and similar protection that telecoms operators can claim under the Code.
  • Dispute resolution: the new Code can provide for a more specific dispute resolution procedure where the parties cannot agree terms.
  • Conferral of Code rights: An operator will be able to apply to the Court for the grant of interim code rights for a certain period of time or until a certain event takes place.
  • Termination: new, more lengthy, notice procedures for terminating Code agreements.
  • Retrospectivity: existing agreements will not be covered by the new Code.

We will report further once the new Code finally comes into force…..

Rob Shaw, Senior Associate and Ben Rogers, Legal Director

Posted in Internet of Things

IOT Devices: Just Hardware or FCC Powder Keg?

With the meteoric proliferation of “Internet of Things” (IOT) devices, there are an increasing number of innovators and inventors bringing “smart” products to market that capitalize on connectivity in ways never before imagined. While a great deal of resources are typically applied to research and development, marketing, production, distribution and customer awareness, the essence of most IOT devices is wireless communications so attention must be given to the Federal Communications Commission (FCC) regulations on radio emissions.  Each year the FCC levies tens of millions of dollars in penalties for violations of its rules—rules that encompass activities and devices in ways that may not be immediately obvious.  We have set forth some basic guidelines to help start-ups, investors, and even established manufacturers make sense of the FCC’s requirements.

Without further ado, ten things the FCC cares about:

Things that intentionally emit radiofrequency (“RF”) energy.
This may seem obvious, but the FCC regulates devices that use RF intentionally, such as cellphones, walkie-talkies, and Wi-Fi, Bluetooth and Zigbee transmitters.  Such devices must comply with the FCC’s equipment authorization procedures that ensure that the device conforms with specified technical standards that help limit the potential for interference to other spectrum users.  Compliance with the FCC’s equipment authorization rules is most often demonstrated by a permanent label affixed to the device showing the FCC’s mark and the products FCC identifying number.

Things that unintentionally emit RF.
It’s fairly obvious that the FCC would have jurisdiction over the manufacture and marketing of wireless communications devices.  Less obvious is its authority to control the importation and marketing of devices that emit RF energy unintentionally.  Nearly all devices with digital componentry are implicated – computing devices, smart appliances, video monitors, power supplies, and similar products.  These devices must be tested by an accredited test lab facility to ensure compliance with applicable technical standards before they can be imported and marketed in the United States.

Things that incidentally emit RF.
There’s even a third category of devices that fall within the FCC’s purview.  Incidental radiators include devices that are not designed to intentionally use, generate or emit RF energy over 9 kHz.  Devices  such as AC motors and fluorescent lighting are exempt from FCC test requirements but manufacturers must still use good engineering practices to limit, to the extent possible, the interference effects from such devices.

Importation of RF devices.
While it is tempting to assume that someone else in the supply chain has ensured conformity with the FCC’s rules, companies need to be proactive regarding FCC compliance when importing radio products.  With only very limited exceptions, the FCC rules require that devices brought into the U.S. have appropriate FCC equipment approvals.  Failure to do so may result in critical components being seized at the border.  Even if the products are not stuck in a customs warehouse–with the amount of offshore manufacturing that is done today, there may be instances where products without appropriate approvals are delivered in the U.S. and escape customs notice–the subsequent sale of those devices in the U.S. will violate FCC regulations and may subject the seller to fines.

Modification of OEM RF devices (triggering new approvals).
Even where a company has obtained an equipment authorization from the FCC, appropriate attention has to be paid to the evolution of the product over time, since certain changes can require the manufacturer or seller to obtain a new authorization.  As a rule of thumb, changes that alter the physics of the RF emissions should be carefully reviewed under the FCC’s rules, as they often trigger the need to seek new approvals.  Complicating matters even further is the practice of integrating components that have received their equipment authorization as stand-alone modules.  The final assembled product may have its own testing and labeling requirements even though it is comprised of approved parts.

Marketing of RF devices.
Today, speed to market often means that companies would like to pre-market products—whether to support a crowd-funding initiative or as a means to capture market share.  In general, however, the FCC greatly restricts the marketing of RF devices before they complete the approval process.  The FCC has been known to walk the floors at trade shows to inspect whether new products are being displayed to potential customers impermissibly prior to receiving proper approvals.

Experimenting with RF devices.
Development of new products invariably requires experimentation, and when that experimentation involves radiation of radio energy, an FCC license is typically required.  While the FCC generally freely grants experimental licenses for private testing, the experimental rules impose added limitations on what can be done with experimental products when it comes to market tests and trials, which require special authorizations.

Spectrum compatibility.
Most innovators today would like to capitalize on a global product market, but RF regulations differ from country to country.  That being said, there are radio bands that are more or less standardized from region to region, and considering global regulatory issues at the initial stages of product development may save headaches down the road.  With its global telecommunications capabilities, DLA Piper’s telecom practice is able to assist with international compatibility and market entry surveys.

Transfer of RF manufacturing assets.
Whether you are an investor looking to fund a IOT venture, a business acquiring a start-up, or an innovator looking for equity backers, FCC regulated companies require special considerations.  To the extent a company has licenses, FCC consent or notice may be required—in some cases prior to closing—for transactions that involve transfers of control or assignment of assets.  In addition, FCC regulated companies implicate specialized due diligence in transactional scenarios.

Devices that create networks.
As a final matter, even if the RF components of a device are not FCC regulated—or are FCC regulated but the company taken appropriate actions—the FCC might be implicated in other ways.  Specifically, in addition to regulating radio, the FCC also regulates telecommunications—communications networks and network providers.  This becomes important because if IOT or connected products are sold bundled with communications capabilities acquired from third parties, the seller may be subjecting itself to regulation as a carrier—that may result in the need to obtain special authorizations, to pay into carrier-funded social programs like the Universal Service Fund, or other regulations.  DLA Piper’s telecommunications team routinely advises companies on structuring communications activities in ways that avoid carrier regulation by the FCC.

 

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