Insights Brussels - Oct 2015

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INSIGHTS BRUSSELS

A regular alert on key EU policy developments s Issue 26 October Ssel 2015 GHTS B SI

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Stakeholder engagement at the core of the EC digital market strategy I

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Contents

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Digital 3 ruS Audiovisual Media Services Directive

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Satellite and Cable Directive

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Needs for internet speed and quality beyond 2020

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Priority ICT standards plan

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Online platforms, cloud & data, liability of intermediaries, collaborative economy

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Geographically based restrictions when shopping and accessing information in the EU

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Modernising VAT for cross-border e-commerce

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EU Campaign for Cybersecurity

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Electronic communications networks and services

Energy 7 EU Strategy Package on Natural Gas and LNG to be unveiled early next year

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Electricity market interconnections

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COP21 EU mandate

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Financial Services

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Action Plan on Capital Markets Union

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Digital

Following the adoption of the EU Digital Single Market strategy (DSM), the European Commission is now focusing on the development of an EU regulatory and policy framework aimed at bolstering the development of the European digital landscape. For that purpose, eight consultation processes have been launched; one of these has just been closed and the others will run until November and December.

The consultations cover a wide range of policy issues, spanning from intellectual property rights to the role of on-line platforms and intermediaries, requiring in-depth market insight and thoughtful analysis to better inform the launch of any new legislative proposal in this area. Businesses and stakeholders interested by these developments should not lose this opportunity to make their voice heard in Brussels.

Following the consultation process, the Commission will assess the contributions received and likely submit a new legislative proposal later in 2016. Beyond the on-going consultation process, it is worth mentioning the EC campaign on cybersecurity that will run across Europe in October.

Audiovisual Media Services Directive

Since 2010, the EU’s Audiovisual Media Services Directive has governed the EU-wide coordination of national legislation on all audiovisual media, both traditional TV broadcasts and on-demand services. Before undertaking any review of the current legislation, the Commission has been gathering concrete experience and feedback from stakeholders (market players, public organisations, consumer organisations) but

also from consumers themselves, as users of audiovisual media services like TV channels and online services. The final assessment of responses submitted in this process will include an analysis of the added value of EU intervention in this domain and how effective the existing framework has been so far.

This is the first time respondents have been offered a wider variety of options while giving their feedback to the consultation, including the opportunity to submit their own ideas on how to improve legislation, provide their personal experience on how the directive has been working, and even create polls to gather other people’s views on their suggestion via the dedicated EC online platform.

Satellite and Cable Directive

In the light of the foreseen review of the twenty years old EU Satellite and Cable Directive, the European Commission aims to evaluate the adequacy of EU rules on copyright licensing for TV and radio broadcasting by satellite and cable when applied to the new online environment. It will also look into whether the rules have helped European citizens to get better access to TV and radio content from other Member States. The Commission is also seeking views on the possible extension of these rules to enhance cross-border access to online content services within the EU. The consultation will run until 16 November and the Commission is expected to share the results of the consultation in Spring 2016. The first concrete legislative proposals are expected to follow shortly afterwards.

The Digital Market today 1 in 3 Europeans is interested in watching or listening to content from their home country when abroad

54% (US)

1 in 5 Europeans is interested in watching or listening to content from other EU countries

“315 million Europeans use the Internet every day” Source: The European Commission

4% (EU) Cross-border 42% (EU) National - 28 member states

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Electronic communications networks and services The review of the regulatory framework for electronic communications is one of the 16 actions planned under the DSM Strategy. The purpose of the consultation launched on 11 September is to gain market insight on the adequacy of the current regulatory framework and to assess whether it should be reformed in light of market and technological developments.

The consultation covers 3 pillars: • The network pillar: building a consistent regulatory environment that is supportive for infrastructure investments in both fixed and wireless networks; • The service pillar: developing a modernized regulatory regime for electronic communication services; • The governance pillar: ensuring that markets are regulated in a consistent manner across the EU. The deadline to contribute is 7 December with the results expected in early January 2016. Legislative proposals will follow shortly after.

Needs for internet speed and quality beyond 2020 The Commission wants to hear from users across all sectors, especially those who develop applications and services dependant on connectivity, about European broadband needs in terms of speed and quality, and to learn more about foreseen market developments in fixed and mobile digital networks. The purpose is to provide input to the design and the implementation of EU policy, regulatory and funding instruments that can contribute to fostering investment in

the deployment of future-proof connectivity networks. This consultation runs in parallel to the other and will focus on the review of the 2009 Telecoms Package, examining to what extent the EU’s telecoms rulebook needs to be modernised to address technological and market challenges. It asks about the future of network access regulation, spectrum management, communication services, universal service and telecoms governance. Following the evaluation process, the Commission will present its proposal on how to address the identified challenges in telecoms and broadband. Earlier this year, EU institutions agreed on strong net neutrality rules protecting the right of every European to access Internet content without discrimination, at the same time agreeing on the end of roaming charges by June 2017. These public consultations will run until 7 December.

Priority ICT standards plan On 23 September, the EC launched a public consultation to gather stakeholders’ views on standards in key technologies that are crucial to the functioning of the DSM, e.g.: 5G communications, cloud computing, cybersecurity, data driven services and applications, eHealth, Intelligent Transport Systems (ITS), Internet of Things, Smart Cities and efficient energy use.

Standards are developed by a number of different actors as part of a voluntary process, which is consensus-oriented.

The EU can help create the scale necessary for standards development and ensure that such standards reflect as much as possible the European interests.

The contributions to this consultation, which runs until 16 December 2015, will feed into the development of the upcoming EU priority ICT standards plan.

Rolling out fast broadband for all Take-up of fast broadband is low: only 22.5% of all subscriptions are fast ones (above 30Mbps) and Europe has witnessed significant time lags in the rollout of the latest 4G technology due to the non-availability of suitable spectrum.

Spectrum reforms can decrease prices of mobile services and boost productivity over time (estimated EU-wide GDP increase between 0.11% and 0.16% over 5 years)

59% Only 59% of Europeans can access 4G, dropping to 15% in rural area

15% Source: The European Commission

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“Creating a European Digital Economy and society with growth potential” Digital data stored in cloud Online platforms, cloud & data, liability of intermediaries, collaborative economy Through the long-awaited consultation launched on 24 September, the EC wants to better assess the social and economic role of online spaces where providers and users of content, goods and services can meet (such as internet search engines, social media, knowledge and video sharing websites, news aggregators, app stores and payment systems).

The consultation covers a wide range of issues, notably: transparency in search results, terms of use, ratings and reviews, the use of information by platforms; the relation between platforms and their suppliers; the conditions of switching between comparable services offered by platforms, the role of online intermediaries including ways to tackle illegal content on the Internet. The consultation is also collecting views on the liability of intermediaries as regards illegal content hosted online and how to improve the free flow of data in the EU and to build a European Cloud.

Finally, it is looking into the role of platforms in the collaborative economy and their impact on rights and liabilities, innovation and consumer choice.

This consultation, which runs until the end of December (exact date to be confirmed), is the first step in the Commission’s examination of the issues around platforms, and will feed into a comprehensive assessment on the role of platforms and intermediaries planned for the first part of 2016.

Geographically based restrictions when shopping and accessing information in the EU On 24 September, the Commission launched its consultation on “geo-blocking” and other forms of geographically-based restrictions. The EC aims to gather views on unjustified commercial barriers which prevent from buying and selling products and services within the EU. The consultation identifies known examples, and contains questions to gather more real-life experiences. It covers, for example, customers who are charged different prices or

2013: 20% - 2020: 40%

The use of big data by the top 100 EU manufacturers could lead to savings worth €425 billion Studies estimate that, by 2020, big data analytics could boost EU economic growth by an additional 1.9%, equalling a GDP increase of €206 billion Source: The European Commission

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offered a different range of goods depending on where they live, but it does not cover geo-blocking in relation to copyright and content licensing practices.

The consultation, which runs until the end of December (exact date to be confirmed), will help the Commission prepare legislative proposals in the first half of 2016 to end unjustified geo-blocking, which could include targeted change to the e-Commerce rules and to the Services Directive. Separately, the Commission is also investigating geo-blocking and related issues in a Competition Sector Inquiry on the application of competition law in e-commerce.

Modernising VAT for cross-border e-commerce On 25 September, the Commission launched its consultation on simplifying VAT payments on cross-border e-commerce transactions in the EU. The consultation covers in particular: • • • •

the extension of the current single electronic registration and payment mechanism to cover the sale of tangible goods; the introduction of a VAT threshold to help online start-ups and small businesses; allowing cross-border businesses to be audited only by their home country for VAT purposes; removing the VAT exemption for the import of small consignments from suppliers in third countries.

The consultation will run until 18 December. It will feed the legislative proposal to reduce the administrative burden on businesses arising from different VAT regimes the EC has planned for 2016.

EU Campaign for Cybersecurity European Cyber Security Month (ECSM) is an EU advocacy campaign that promotes cyber security among citizens and advocates for change in the perception of cyber-threats by promoting data and information security, education, sharing of good practices and competitions. The European Union Agency for Network and Information Security (ENISA), the European Commission DG CONNECT and a wide range of partners are deploying European Cyber Security Month (ECSM) throughout Europe during October. The objectives of the European Cyber Security Month are:

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generate general awareness of cyber security, which is one of the priorities identified in the EU Cyber Security Strategy;

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generate specific awareness on Network and Information Security (NIS), which is addressed in the proposed NIS Directive;

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promote safer use of the Internet for all users;

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build a strong track record to raise awareness through the ECSM;

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involve relevant stakeholders;

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increase national media interest through the European and global dimension of the project;

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enhance attention and interest with regard to information security through political and media coordination.

To know more about the national initiatives, get the EU cybersecurity toolbox and get involved check : https://cybersecuritymonth.eu/

“Small online businesses wishing to trade in another EU country face a VAT compliance cost of at least €5,000 annually for each Member State where it wishes to supply “

An inclusive e-society Almost half the EU population (47%) is not properly digitally skilled, yet in the near future, 90% of jobs will require some level of digital skills

A strategy of ‘digital by default’ in the public sector could result in around €10 billion of annual savings

Source: The European Commission

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Energy

EU Strategy Package on Natural Gas and LNG to be unveiled early next year The EC is working at revamping its approach to natural gas, with a Strategy Package due out early next year that would give the Commission the right to take a look at sensitive long-term supply contracts and take steps to ensure the bloc is more resistant to external supply shocks. The Package is also expected to include a Liquefied Natural Gas (LNG) strategy.

A key measure in the making to undercut the market power of Russia’s Gazprom is to allow the Commission to have more access to information and review a set of “particularly important gas supply contracts” that lock European countries into long-term deals with the Russian gas giant. To further boost transparency of energy agreements, the Commission is also intent on looking at inter-governmental gas agreements before they are signed.

Regarding infrastructures, European Commission Vice-President Maroš Šefčovič has further urged the creation of additional Liquefied Natural Gas (LNG) terminals in the South Eastern Member States in preparation for a shift in focus to LNG supplies. Current proposals are for an increase in the use of LNG – currently accounting for 25% of all EU energy – by reaching out to new suppliers. Currently Algeria, Qatar and Nigeria are the EU’s suppliers but this is to be expanded to include Australia, the United States and Canada. Opening the market to new suppliers and increasing imports – by a projected 40% – could also drive down current costs and compensate for decreasing domestic gas production which has fallen by 25% over the last five years. Based on the responses to the public consultation on LNG, which concluded on 30 September, the Commission will consider future measures including revisions to the existing Gas Security of Supply Regulation.

Electricity market interconnections One of the main challenges facing the Energy Union is the lack of interconnectivity between Member States to allow the transfer and trade of energy across national markets. In late

July, the European Commission adopted new rules governing its electricity market that enable a mechanism known as ‘market coupling’ to be implemented legally across Member States’ electricity markets. The new regulation will allow cross-border cooperation between national power exchanges and bring them together as a more integrated market where bids and offers for services from providers can be made across borders with greater ease.

Commission Vice-President Šefčovič has been promoting investment to ensure sufficient infrastructure to ‘link’ national grids together. Recent investment has seen the construction of a 190km power interconnection linking France and Italy via the Alps. Interconnectivity infrastructure will not remain exclusive to the EU. During a recent conference of Western Balkan states, Šefčovič underlined the need to develop such a project beyond EU borders and ensure the interconnection of Albania, the Former Yugoslav Republic of Macedonia (FYROM), Serbia, Montenegro, Bosnia and Herzegovina, Romania and Serbia. This move not only intends to enhance connectivity in South Eastern Europe, but is also a means to begin investment in Balkan infrastructure ahead of the accession of EU candidate countries in the region.

COP21 EU mandate After several months of negotiations, EU environment ministers agreed in September on the COP21 bloc’s mandate for climate change talks, calling for a long-term goal to cut greenhouse-gas emissions by at least half by 2050 compared with 1990 levels, and to “be near zero or below” by the end of the century.

Those targets are slightly different from those envisaged by the European Parliament. On 22 September, the Environment Committee stated that the Parliament’s delegation to the COP 21 climate talks in Paris must call for a 40% cut in greenhouse gas emissions by 2030, a 40% energy-efficiency target and a binding 30% target for renewable energy. The Committee also wants a share of the EU’s carbon market allowances to be earmarked for climate finance, and for the aviation and shipping sectors to initiate measures to curb their emissions by the end of 2016. The full House will vote on 14 October.

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Financial Services

As regards financial services, two upcoming initiatives are worth being outlined: the Action Plan on Capital Markets Union and the Green Paper on Financial Retail Services and Insurance.

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Action Plan on Capital Markets Union

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The Capital Markets Union seeks to ensure the diversification of sources of finance to allow companies, particularly SMEs, to tap into capital markets and gain access to non-bank financial means such as credit. The action plan presented on 30 September by the Commission sets out the priority actions needed to put in place the building blocks of a Capital Markets Union by 2019, removing barriers to cross-border investment and lowering the costs of funding.

Together with the Action plan, the Commission has also disclosed a few immediately operational initiatives. These cover: • A legislative proposals to establish a framework for simple, transparent and standardised securitisation and to set out new prudential calibrations for banks in the Capital Requirements Regulation (CRR);

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An adjustment to the “Solvency II” legislation to make it easier for insurers to invest in infrastructure and European Long Term Investment Funds (ELTIFs); A consultation on how to build a pan-European covered bond framework; A call for evidence on the cumulative impact of financial services reforms, with the objective of assessing the interactions between rules and cumulative impact of the reforms adopted in the recent years; A consultation on venture capital to assess whether targeted changes to the regulations could boost the take-up of these investment funds.

Later in the year the Commission will review the Prospectus Directive to reduce barriers to smaller firms listing on markets, and publish a “Green Paper” on retail financial services to boost consumer choice and competition in cross-border retail, financial services and insurance. Likely issues to be addressed by the Green Paper include market fragmentations, lack of confidence in national retail financial markets, low cross-border consumer activity and problems with the perceived transparency of financial institutions.

Image: The European Commission

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Leonardo Sforza leonardo.sforza@mslgroup.com

Nicolas Acker

nicolas.acker@mslgroup.com

Olivier Hinnekens olivier.hinnekens@mslgroup.com

Romain Seignovert

WWW.MSLGROUP.COM

Twitter @MSL_BRUSSELS

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Square de Mee没s 23, 1000 Brussels, Belgium

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romain.seignovert@mslgroup.com

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