Regulation (continued) Unaudited information 256 Vodafone Group Plc Annual Report 2024
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before the provisions become applicable. On 6 October 2023, the EU-Moldova Association Committee in Trade Configuration adopted a decision to apply EU Roam-Like-at-Home, intra-EU communication provisions and EU fixed and mobile termination rates between the EU and Moldova. The time frame for transposition by Moldova is one year for intra-EU communications and two years for roaming and MTR/FTR after entry into force of this decision. The EC will then assess the transposition and in a further step grant internal market treatment before the provisions become applicable. On 15 January 2024, the EC published a Staff Working Document on the findings of the 2023 review of the rules on EU-Roaming fair use policies. The Roaming Regulation (EU) 2022/612 requires the EC to periodically review the rules on (i) the application of fair use policy and (ii) the methodology for assessing the sustainability of the abolition of retail roaming surcharges. In its 2023 review, the EC concluded that the current safeguards are working and remain unchanged. On 15 September 2022, the EC adopted its draft Cyber Resilience Act (‘CRA’), introducing horizontal cybersecurity requirements for products with digital elements and associated services that are placed on the European single market. Products in scope will be subject to conformity assessment. Highly critical products will be subject to European cybersecurity certification schemes. The EC’s draft CRA has entered the co-legislative process which is likely to be completed in Q2/2024 and apply 18 months to three years thereafter. In December 2023, negotiators finalised the text of the EU Artificial Intelligence Act (‘AI Act’), the world’s first comprehensive, horizontal regulation for AI systems. The final text confirms the risk-based approach, where AI systems surpassing a certain risk threshold are either prohibited outright, or subject to proportionate regulatory obligations. The final text also includes a compromise on General Purpose AI systems, whereby all providers of these foundational technologies are subject to some baseline regulatory requirements (transparency, record keeping and compliance with Copyright law) and systems that are deemed to be high impact (based on an evaluation of compute power) subject to additional risk mitigation rules. The Gigabit Infrastructure Act (‘GIA’) (which revises the 2014 Broadband Cost Reduction Directive (‘BCRD’) is in its last stages before adoption. The GIA aims to reduce the cost of deploying gigabit electronic communication networks. While some of the proposed measures were watered down in the legislative process, welcomed proposals include the right to submit applications for all permits (or renewals) and rights of way in electronic format via a ‘Single Information Point’, permit fees not exceeding administrative costs, permit exemptions to civil engineering works, conditional tacit approval on permits and access to rooftops. The European Parliament proposed a ban on intra-EU communications retail surcharges which is unrelated to the GIA proposal, and this could have material impact on telecommunications operators. The legislators agreed to prolong the current caps until 1 January 2029. Abolition of surcharges from then onwards is conditional on (i) an EC review/impact assessment by 2027 and (ii) an EC implementing act on fair use provisions by 2028. Otherwise, the caps will expire in 2032. The GIA determines that telecommunications operators may voluntarily apply ‘call-like-at- home’ charging from 1 Jan 2025 subject to fair use policy. The EC & European Parliament adopted the GIA on 29 April 2024. This will replace the 2014 BCRD. The new law aims to simplify and accelerate the roll-out of high-speed networks, such as fibre and 5G, with a view to achieving Europe’s connectivity objectives and targets set out in the digital compass for this decade. The new regulation also aims to lower the unnecessarily high costs of the deployment of high-capacity networks partially caused by permit-granting procedures. The latter will be simplified through a
mandatory conciliation mechanism between public sector bodies and telecommunication operators. In addition, given that the present retail price cap for regulated intra-EU communications will expire on 14 May 2024, the current caps of 19 eurocents per minute for calls and 6 eurocents per SMS message are extended until 30 June 2032 to ensure protection, especially for vulnerable consumers. The text will be published in the EU’s Official Journal and enter into force before the end of May. The new law will apply 18 months after its entry into force with some specific provisions applying at a later stage. The EC adopted a recommendation on the promotion of Gigabit Connectivity which seeks to provide guidance to National Regulatory Authorities on the conditions of access to the telecommunications networks of operators with significant market power ‘SMP’. This instrument replaces the 2010 Next Generation Access Recommendation and the 2013 Non-discrimination and Costing Methodologies Recommendation. BEREC had adopted an opinion on the draft and had raised several issues, including the lack of alignment with the European Electronic Communications Code. It had specifically mentioned, for example, that there is a lack of sources or impact analysis clearly demonstrating that deregulating SMP Operators (e.g. removing remedies such as price regulation, allowing for an increase in copper access prices) speeds up very high capacity networks deployment/take-up. The EC took the BEREC Opinion into account, yet no substantial modifications were made. The EC also adopted, in February 2024, a digital connectivity package aimed at fostering innovation, security and resilience of digital infrastructures. The package includes two components; a white paper and a recommendation. The white paper entitled“How to master Europe’s digital infrastructure needs?” analyses the challenges that Europe faces regarding the rollout of future connectivity networks, and presents possible scenarios to attract investments, foster innovation, increase security, and achieve a true Digital Single Market. The recommndationr elates to the security and resilience of submarine cable infrastructures, focusing on improving submarine cable security and resilience, through better EU coordination of governance and funding. A public consultation on the White Paper scenarios is on-going until 30 June 2024. Country specific Germany Licences for frequency allocations at 800MHz, parts of 1800MHz, and 2600MHz will expire at the end of 2025. Vodafone Germany currently holds allocations at 800MHz and 2600MHz. BNetzA is currently assessing its options on how to proceed on the reallocation of this spectrum. It may either re-auction the spectrum, or prolong the existing licences, or a combination of these. BNetzA is expected to make a final decision on next steps in Q2/2024. In 2019, Vodafone acquired spectrum at 2.1GHz and 3.6GHz. The spectrum allocation includes coverage obligations which, depending on the specifics of the obligation, have to be fulfilled by end of either 2022 or 2024. All mobile network operators have reported on time on the status of obligation fulfilment for the 2022 obligations, including given judicial or factual circumstances hindering fulfilment. BNetzA has assessed the reports, including Vodafone’s, and informed Vodafone about the results at the end of September 2023. Currently, BNetzA is conducting an official hearing with Vodafone on possible fines for a minor number of cases of non-fulfilment. BNetzA is expected to issue a final decision on potential fines after completion of the hearing in Q2/2024.
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