Article 105(3) of the upcoming Council Directive 2018/1972 establishing the European Electronic Communications Code ("EECC")1 intends to provide stronger termination rights for telecommunications customers. This provision sets out that telecommunication providers may implement automatic contract extensions, but on the condition that they notify customers "in a prominent and timely manner" of the customer's ability to terminate the contract, while also providing the customer with the best tariff advice relating to their service. The EECC is due to be transposed into national law in all Member States by December 2020.
In line with Article 105(3), Ofcom has recently introduced its new Fairness for Consumers programme, which will require telecommunications providers that supply broadband, TV, mobile and home phones to consumers and business customers to notify customers of important information 40 days prior to the expiry of their current contracts. Different requirements apply depending on whether the customer is a business or non-business customer. The programme is to be implemented throughout the UK by 15 February 2020 which is expected to predate the implementation of the EECC in the UK.
The information to be shared with consumers (i.e. non business) includes:
- the current contractual price paid and services provided;
- any changes to the price and service following expiry of the current contract;
- the applicable notice period;
- details of other contracts the consumer holds with the provider and the expiry dates of same;
- the options open to the customer;
- whether there are early termination charges; and
- how the customer can terminate the contact.
Business customers must simply be notified of the best tariff options, the date on which their fixed term contract ends and how to terminate their contract.
The introduction of these new rules aims to enable greater transparency for customers with regard to the best deals available to them, and to avoid customers paying more to telecommunications service providers than is necessary.
As of July 2019, Irish authorities have yet to take similar action to align the current Irish framework with Article 105(3) of the EECC (although are obliged under EU law not to make any decisions which are contrary to the EECC pending its transposition). No similar notification obligations exist under Irish broadcasting or telecommunications frameworks, however certain provisions in Irish legislation do require transparency of material information in contracts and we set out a brief summary of these provisions below:
Minimum Information / Changes to Customer Contracts
Regulation 14(1) and (2) of the Universal Service and Users' Rights Regulations 20112 states that all undertakings which provide electronic communications services to customers must do so in accordance with a contract that sets out: the services provided; details of prices and tariffs; duration of the contract; conditions for renewal; and any termination charges.
Regulation 14(4) further specifies that an undertaking must, within a minimum of one month's notice prior to implementing any changes, notify the customer of the proposed changes and the customer's right to withdraw without penalty from the contract if they do not wish to accept these changes (similar obligations already exist in the UK under the existing framework).
Part 3 of the Consumer Information Regulations 20133 outline minimum information that must be included in 'distance' or 'off-site' contracts (i.e. internet or phone sales) including information on the trader, pricing information and means of cancellation of contract.
Section 46 of the Consumer Protection Act 2007 (as amended) states that a commercial practice is misleading if the provider omits / conceals material information that an average consumer would need in the context to make an informed transactional decision.
Unfair Terms and Renewal of Contracts
Schedule 3, 1(h) of the Unfair Terms in Consumer Contracts Regulations 1995 (as amended) states that a term in a consumer contract is unfair if it automatically extends a contract of fixed duration where the consumer does not indicate otherwise, when the deadline fixed for the consumer to express their desire not to extend is unreasonably early. Historically, this has not been a core focus for telecommunications regulator, ComReg, which shares enforcement powers for this legislation with the competition and consumer protection regulator, the CCPC.
The above provisions are designed to protect Irish consumers and do require telecommunications providers to provide certain key contractual information, however, do not go as far as Ofcom's proposals which require providers to also provide the best deals available prior to the conclusion of their contracts. It is likely that the Irish authorities will look to the Article 105(3) and to Ofcom's programme for guidance and may introduce similar requirements for telecommunications providers in the near future.
1 “Full text - Where a contract or national law provides for automatic prolongation of a fixed duration contract for electronic communications services….Before the contract is automatically prolonged, providers shall inform end-users, in a prominent and timely manner and on a durable medium, of the end of the contractual commitment and of the means by which to terminate the contract. In addition, and at the same time, providers shall give end-users best tariff advice relating to their services. Providers shall provide end-users with best tariff information at least annually.”
2 S.I. No. 337/2011 - European Communities (Electronic Communications Networks and Services) (Universal Service and Users' Rights) Regulations 2011.
3 S.I. No. 484/2013 - European Union (Consumer Information, Cancellation and Other Rights) Regulations 2013.
This article was co-authored by EU Competition partner Kate McKenna and EU Competition senior associate Simon Shinkwin