The Technology, media and

Telecommunications Review

Law Business Research

Second Edition

Editor

John P Janka

The Technology, Media and Telecommunications Review

second ediTion

Reproduced with permission from Law Business Research Ltd.

This article was first published in The Technology, Media and Telecommunications Review, 1st edition

(published in october 2010 – editor John P Janka).

For further information please email Adam.sargent@lbresearch.com

The Technology, Media and

Telecommunications

Review

second ediTion

editorJohn P Janka

Law Business Research Ltd

PuBLisheR Gideon Roberton

Business deveLoPMenT MAnAGeR Adam sargent

MARkeTinG MAnAGeRs nick Barette, katherine Jablonowska

MARkeTinG AssisTAnT Robin Andrews

ediToRiAL AssisTAnT Lydia Gerges

PRoducTion MAnAGeR Adam Myers

PRoducTion ediToRs Joanne Morley

suBediToR caroline Rawson

ediToR-in-chieF callum campbell

MAnAGinG diRecToR Richard davey

Published in the united kingdom by Law Business Research Ltd, London

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© copyright in individual chapters vests with the contributors no photocopying: copyright licences do not apply.

The information provided in this publication is general and may not apply in a specific situation. Legal advice should always be sought before taking any legal action based on the information provided. The publishers accept no responsibility for any acts

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i

The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book:

ABou JAoude & AssociATes LAW FiRM

AdvokATsko dRuZhesTvo AndReev, sToYAnov & TsekovA in cooperation with schoenheRR

BAhAR & PARTneRs

BAkeR & MckenZie.WonG & LeoW

cLeARY GoTTLieB sTeen & hAMiLTon LLP

edWARd nAThAn sonnenBeRGs

eLvinGeR, hoss & PRussen

GeoRGiAdes & MYLonAs, AdvocATes & LeGAL consuLTAnTs

Jones dAY

kocián ŠoLc BALAŠTík, AdvocATes

kRoMAnn ReuMeRT

LAThAM & WATkins LLP

LAThAM & WATkins GAikokuho JoinT enTeRPRise

M&M BoMchiL

MinTeR eLLison

RoschieR AdvokATBYRå AB

RoschieR ATToRneYs LTd

sAid AL shAhRY LAW oFFice

AcknoWLedGeMenTs

ii

Acknowledgements

schoenheRR & AsociATii scA

schoenheRR ATToRneYs AT LAW

seTh duA & AssociATes

shALAkAnY LAW oFFice

snR denTon

uRíA MenéndeZ – PRoençA de cARvALho

WALdeR WYss LTd

Yoon & YAnG LLc

iii

Editor’s Preface ................................................................................................viiJohn P Janka

List of Abbreviations ................................................................................................. ix

Chapter 1 ARGenTinA ����������������������������������������������������������������������� 1Francisco M Gutiérrez and Héctor M Huici

Chapter 2 AusTRALiA ������������������������������������������������������������������������14Anthony Lloyd, Paul Kallenbach and Paul Schoff

Chapter 3 AusTRiA ����������������������������������������������������������������������������30Christian Schmelz and Andreas Orator

Chapter 4 BuLGARiA �������������������������������������������������������������������������40Radoslav Chemshirov

Chapter 5 cYPRus ������������������������������������������������������������������������������50Yiannos G Georgiades and Rebecca E Howarth Seaberg

Chapter 6 cZech RePuBLic �����������������������������������������������������������67Drahomír Tomašuk

Chapter 7 denMARk �������������������������������������������������������������������������81Torben Waage, Louise Sofie Falch, Martin Dahl Pedersen and Daniel Herman Røjtburg

Chapter 8 eGYPT ��������������������������������������������������������������������������������92Aly El Shalakany and Omar Sherif

Chapter 9 euRoPeAn union �������������������������������������������������������102Maurits J F M Dolmans, Francesco Maria Salerno and Malik Dhanani

conTenTs

iv

Contents

Chapter 10 FinLAnd �������������������������������������������������������������������������131Mikko Manner, Anna Haapanen and Vilhelm Schröder

Chapter 11 FRAnce ���������������������������������������������������������������������������142Myria Saarinen and Jean-Luc Juhan

Chapter 12 GeRMAnY �����������������������������������������������������������������������154Zahra Rahvar

Chapter 13 honG konG������������������������������������������������������������������167Simon Berry and Vi Vi Chow

Chapter 14 indiA �������������������������������������������������������������������������������181Atul Dua, Rahul Goel and Anu Monga

Chapter 15 indonesiA ���������������������������������������������������������������������194Dewie Pelitawati and Melanie Hadeli

Chapter 16 iTALY ��������������������������������������������������������������������������������206Stefano Macchi di Cellere

Chapter 17 JAPAn �������������������������������������������������������������������������������218Hiroki Kobayashi, Tim Johnson and Tomohiko Kamimura

Chapter 18 koReA �����������������������������������������������������������������������������232Wonil Kim and Kwang-Wook Lee

Chapter 19 LeBAnon ������������������������������������������������������������������������244Souraya Machnouk, Rania Khoury, Anis Nasr and Ziad Maatouk

Chapter 20 LuxeMBouRG ���������������������������������������������������������������255Franz Fayot and Linda Funck

Chapter 21 oMAn ������������������������������������������������������������������������������271Syed Ali Naveed Arshad and Stephen T Sayer

Chapter 22 PoRTuGAL ����������������������������������������������������������������������281Jacinto Moniz de Bettencourt, Joana Torres Ereio and João de Sousa Assis

Chapter 23 RoMAniA ������������������������������������������������������������������������294Adriana Năstase and Ionuţ-Alin Sava

v

Contents

Chapter 24 sinGAPoRe ��������������������������������������������������������������������305Ken Chia and Koh See Khiang

Chapter 25 souTh AFRicA ��������������������������������������������������������������327Zaid Gardner

Chapter 26 sWeden ��������������������������������������������������������������������������340Erik Ficks, Björn Johansson and Malin Falkmer

Chapter 27 sWiTZeRLAnd ���������������������������������������������������������������351Hans Rudolf Trüeb and Samuel Klaus

Chapter 28 uniTed ARAB eMiRATes ���������������������������������������������363Joby Beretta

Chapter 29 uniTed kinGdoM ������������������������������������������������������376Omar Shah and Gail Crawford

Chapter 30 uniTed sTATes �������������������������������������������������������������392John P Janka and Jarrett S Taubman

Appendix 1 ABouT The AuThoRs ������������������������������������������������408

Appendix 2 conTRiBuTinG LAW FiRMs’ conTAcT deTAiLs ����� 429

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editor’s preface

The recent passing of tMt pioneer steve Jobs provides an appropriate moment for reflecting on the impact that innovation in the sector has had on our lives, and how it also has driven – and outpaced – the development of the law.

dramatic advances in microchips have fuelled the digital revolution, spawning a wide range of devices and services that our parents never could have imagined. The iphone, the ipad, itunes and the ipod are but a few examples of technological changes that have challenged old ways of doing business, and also have changed society. We are connected to our work and our social circles anywhere we go; we instantaneously access vast information resources from mobile devices; and we watch films and tV programmes, and listen to music, of our choosing, whenever and wherever we want.

similarly, the internet has changed the way people communicate, and has altered our preferences for receiving information and entertainment. internet-based businesses have challenged traditional media businesses, such as print newspapers, print magazines, and television and radio broadcasting. internet media delivery is now challenging more recently developed forms of media–cable and satellite delivery of subscription video programming. as a result, the legal constructs once put in place to govern media outlets are changing.

The existing telecommunications infrastructure is becoming outmoded. ‘twisted pair’ (copper) is being bypassed in favour of fibre and wireless, as existing phone lines cannot readily support the increasing demand for broadband speeds and throughput. a robust wireless communications infrastructure is necessary to support the booming demand for mobile broadband connectivity to smart phones and tablets. as a result, government policy is evolving to support the deployment of broadband infrastructure, and to facilitate the growth of mobile services; but regulatory change never seems to occur fast enough. While nations are making significant investments to deploy high-speed broadband services to their citizens, significant private investment is still needed for tomorrow’s critical telecommunications and information infrastructure.

Historical spectrum planning did not provide for the current wireless boom. as a result, no incumbent user of spectrum is safe in the refarming of existing spectrum bands. The transition from analogue to digital signal forms is leading to more efficient use of the spectrum, and also is facilitating new approaches to sharing radio spectrum.

Editor’s Preface

viii

regulators are coming under increasing pressure to capture the value associated with the spectrum bands that are being opened for these new purposes.

The broadband revolution has eliminated one information bottleneck that once existed when consumers had to rely on a few newspapers, tV stations and radio stations. Now they are able to use internet-based services such as facebook and twitter – albeit sometimes in the face of governmental attempts to stem the free flow of information to and from their jurisdictions. other ‘gatekeepers’ are developing in the distribution chain as application service providers seek to constrain access to certain content, whether by using their influence to cause broadband providers to block access to that content entirely, or to prioritise one information source over another.

We are being monitored, and our personal information is being collected, stored and mined, in a manner that regulators never envisioned and that the law is not well-suited to constrain. Virtually every internet access and wireless device we use knows were we are, and tracks what we do. While this personal information can be used for purposes that some may find desirable (such as targeting products and services to us), gathering and storing that information virtually eliminates any expectation of privacy. in many jurisdictions, the law is inadequate to manage the chances for abuse and the consequences of security breaches.

This second edition of The Technology, Media and Telecommunications Review expands to 30 the jurisdictions in which we provide an overview of the legal constructs that govern these types of issues. While the authors cannot fully address every one of these topics in the following articles, we do hope this book provides a helpful framework for your analysis.

John P JankaLatham & Watkins LLpWashington, dcoctober 2011

ix

List of aBBreViatioNs

3G Third-generation (technology)4G fourth-generation (technology)adsL asymmetric digital subscriber linearpU average revenue per userBiap Broadband internet access providersBWa Broadband wireless accesscatV cable tVcdMa code division multiple accesscMts cellular Mobile telephone systemdaB digital audio broadcastingddos distributed denial-of-servicedos denial-of-servicedsL digital subscriber linedtH direct-to-homedttV digital terrestrial tVdVB digital video broadcastdVB-H digital video broadcast – handhelddVB-t digital video broadcast – terrestrialecN electronic communications networkecs electronic communications serviceedGe enhanced data rates for GsM evolutionfac full allocated historical costfBo facilitates-based operator’ftNs fixed telecommunications network servicesfttc fibre to the curbfttH fibre to the homefttN fibre to the nodefttx fibre to the xfWa fixed wireless accessGb/s Gigabits per secondGB/s Gigabytes per second

x

GsM Global system for mobile communicationsHdtV High-definition televisionHits Headend in the skyHspa High-speed packet accessict information and communications technologyiptV internet protocol televisionicp internet content providerisp internet service providerkb/s Kilobits per secondkB/s Kilobytes per secondLaN Local area networkLric Long-run incremental costLte Long term evolution (a next-generation 3G and 4G

technology for both GsM and cdMa cellular carriers)Mb/s Megabits per secondMB/s Megabytes per secondMMs Multimedia messaging serviceMMds Multichannel multipoint distribution serviceMso Multi-system operatorsMVNo Mobile virtual network operatorMWa Mobile wireless accessNfc Near field communicationNGa Next-generation accessNic Network information centreNra National regulatory authoritypNets public non-exclusive telecommunications servicepstN public switched telephone networkrf radio frequency sBo services-based operatorsMs short message servicestd–pcos subscriber trunk dialling–public call offices Uas Unified access servicesUasL Unified access services licenceUHf Ultra-high frequencyUWB Ultra-widebandUMts Universal mobile telecommunications service Uso Universal service obligationVdsL Very high speed digital subscriber lineVHf Very high frequencyVod Video on demandVoB Voice over broadbandVoip Voice over internet protocolWiMaX Worldwide interoperability for microwave access

List of Abbreviations

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Chapter 16

ItalyStefano Macchi di Cellere*

* Stefano Macchi di Cellere is a partner at Jones Day.

I OVERVIEW

as highlighted in the 2011 annual report of the Italian authority Safeguarding Communications (‘aGCOM’), the Italian telecommunication market, notwithstanding certain signals of growth, remains on the same declining path as in the two previous years.

Most notably, in 2010, the average expense in the telecommunications sector of Italian families has decreased and investments in infrastructures have also been reduced, compared with years 2008 and 2009. With reference to private players, the average financial results appear to be growing, mostly due to cost-cutting policies (including job-cutting); furthermore, ‘per unit’ revenues of telecom and media operators have also declined.

However, even at such a time, the general indicators of growth in the use of electronic devices for communications and data transmission remain on the upside, giving the impression that it is just a matter of overcoming this latest global recession before the entire sector returns to growth.

II REGULATION

aGCOM is the independent authority established by Italian law No. 249 of 31 July 1997, competent for the regulation and control of the Italian telecommunications market. although in principle the authority is deemed to be independent from any economic and political power, its members are appointed directly by the Italian Parliamentary Chamber and Senate.

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aGCOM is made up from various directorates, including the following:a The Electronic Communication Networks and Services Directorate, which deals

with infrastructure and services issues such as interconnection and access to networks, wholesale and retail telephony and broadband, and numbering and spectrum issues.

b The audio-visual Content and Media Directorate, which deals with all content issues, such as regulation of the licence and authorisation regime for contents and access to multimedia platforms, protection of minors, compliance with the right of reply, protection of intellectual property rights, advertising regulation and public broadcasting.

c The Market analysis and Competition Directorate, which, inter alia, carries out all market analysis activity and liaises with the Italian Competition authority (‘the aGCM’) on the different opinions provided for under the law.

d The Consumers Protection Directorate, which is responsible for dealing with consumer complaints, which also has the task of rendering opinions to the aGCM regarding misleading advertising and is in charge of functions such as that of resolving conflicts or disputes between operators and customers.

Merger control in the telecommunications market is jointly managed by both aGCOM and the aGCM. Pursuant to law No. 249/1997, the aGCM, when investigating a merger concerning the telecommunication sector, must request a non-binding opinion from aGCOM, which must express its opinion within 30 days of such request. Moreover, law No. 177 of 31 July 2005 (‘the Consolidated text of Radio and television’) and aGCOM Resolution No. 646/06/CONS set out the rules in relation to merger control for transactions involving undertakings active in the integrated communication system (‘SIC’).1 Undertakings operating in the SIC that intend to merge with other operators active in the same market are required to notify the merger to aGCOM, which then has 60 days from the notification to verify the compliance of the merger with the rules set out in the Consolidated text of Radio and television.

aGCOM can only issue licences for tV broadcasting to Italian or EU companies. Where such companies are controlled by non-EU companies, the issuance of the licence is possible only if the country of origin of such companies would grant the same rights to Italian companies to enter the market on the basis of a reciprocity principle.

III TELECOMMUNICATIONS AND INTERNET ACCESS

i Internet and Internet protocol regulation

The offering of services over the Internet is governed by the general rules set out by legislative Decree No. 259 of 1 august 2003 (‘the Electronic Communication Code’).

1 The sector of the economy comprising daily newspapers and periodicals, electronic publishing including the Internet, radio and television, cinema, external advertising, product and service announcements and sponsorship.

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By Resolution No. 219/02/CONS, aGCOM defined and segmented the market for the access to the Internet for the first time. In particular, aGCOM stated that the market for access to the Internet could be divided into (1) the end market of services for Internet access in the dial-up fixed network and (2) the intermediate market of interconnection of termination of calls directed to the Internet. Therefore, since 2002, the market for the access to the Internet has been considered by aGCOM as separate from the traditional telephony market.

all ISPs operating in the segment referred to above in point (1), pursuant to law No. 59/2002, may have access to the reference wholesale offer determined by the dominant operator telecom Italia, recognised by aGCOM as having significant market power.

With reference to services over the Internet, aGCOM expressly regulates the supply of VoIP services under Resolution No. 11/06/CIR.

ii Universal service

Compared to the previous year, Internet access in 2010 has increased by 13 per cent and broadband access by 25 per cent. In 2010, 51 per cent of the population (older than three) uses a PC and 48.9 per cent (older than six) has Internet access.2 In line with previous years, there are material differences in utilisation by gender, age and territory both in the use of PCs and Internet access, but social differences are lesser than in the past. In order to reduce the Digital Divide, still existing in Italy, and to close the gap between Italy and other European countries (which remains considerable), the Italian Ministry for Economic Development (‘the Ministry’) presented the National Broadband Plan, aimed at providing a universal broadband service to the whole of Italy by the end of 2012.

The Ministry estimated that, by investing approximately €1.47 billion, by the end of 2012, 96 per cent of the population would have access to an Internet connection of a speed of 20Mb/s and the remaining 4 per cent of the population would have a minimum speed of 2Mb/s. This would be achieved by the connection of 2,900 fibre-optic stations and 1,000 radio links, the replacement of the current stations and the reclamation of network access; to this end, agreements would be put in place between the state and the regional and provincial authorities. On 9 June 2011, the Ministry of Economic Development – Communications Department and the Department for Development and Cohesion – outlined the state of progress of the National Broadband Plan to the regions and over 60 telecoms operators. On the basis of the results of a public consultation launched on behalf of the Ministry by Infratel Italia, it was concluded on 20 april, 2011 that in just two years the Digital Divide throughout the country has been reduced by 46 per cent.

iii Restrictions on the provision of service

In Italy, aGCOM is the competent authority (together with the SIaE, the Italian association of authors and publishers) to prosecute copyright violations committed by means of Internet content, applications or services.

Pursuant to Royal Decree No. 633/1941 and subsequent amendments (‘the Copyright Code’), aGCOM must investigate copyright violations committed through any

2 Source: IStat (Italian National Statistical Institute).

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form of telecommunications (including the Internet). Having said that, pursuant to Italian law, aGCOM does not have the power to apply any kind of civil or criminal penalty, since any such penalties may only be imposed by a competent judicial authority.

Furthermore, although Italian law tends to exclude the imposition of civil or criminal liability upon Internet providers for copyright infringements resulting from content posted by their network users, the applicable rules vary in relation to the type of operator involved. In particular, while access providers cannot be held liable for copyright violation as a consequence of their particular activity, content providers supplying additional services (i.e., hosting and caching) could be held liable only if they had knowledge of the breach and did not intervene to prevent it; however, no general monitoring obligation can be imposed on content providers.

an ISP could be held liable if a copyright owner proves that it had knowledge of the copyright violation or that the ISP itself created the infringing content. Notwithstanding the foregoing, if aGCOM issues an order to the ISP to monitor the contents of its websites, the posting of copyright-infringing content may result in administrative liability for the ISP (since ISPs are obliged to comply with orders issued by aGCOM).

although Internet copyright violations may be prevented by using various technical measures, many of these can raise issues concerning privacy violations or discrimination against users (e.g., aGCOM deemed content filtering, deep-packet inspections or port blocking as contrary to users’ privacy rights and to the principle of network neutrality, and, moreover, has already expressed its concerns about the efficacy of such measures).

Therefore, at present, network operators such as ISPs do not have any specific obligation to monitor compliance with copyright regulation of contents, applications or services posted by users through their networks even if, under specific circumstances, they could be held liable for such violations.

iv Security

as a general measure adopted in order to prevent terrorist attacks, Italy implemented law No. 155 of 31 July 2005, stating that any person intending to start a business offering the opportunity for clients to use electronic communications devices of any kind (except public phones) must first request and obtain a licence from the local police.

Moreover, managers of these activities must identify each customer seeking to use the Internet, phone or fax (e.g., by photocopying their passports or other identification) and record the data relating to their Internet use. The data to be recorded are those necessary for the identification of the user and the date and hour of the communication; however, data relating to the contents of the communication cannot be recorded.

Even if the aforementioned measures were intended to be temporary when first adopted, the effect of such law has already been extended four times, each time for a period of 12 months. This latest time was by law Decree No. 225 of 29 December 2010 (the Decreto Milleproroghe), which, although removing certain restrictions to free Wi-Fi access, is still keeping in place certain limitations mainly applicable to so-called ‘Internet points’, to an extent that justifies the complaints by certain political, industrial and economic representatives as to whether Wi-Fi can be really considered as an open and freely available service, or rather if the burdensome authorisations that are still required in many circumstances severely inhibit use of the full potential of this technology.

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These last measures are due to expire on 31 December 2011, but it is possible that new legal instruments will be introduced for the same purpose, considering that many influential members of the government issued statements defending the closed access to Wi-Fi, deeming it too dangerous not to keep evidence of access to and use of the Internet by potential terrorists.

Privacy and consumer protection legislative Decree No. 196/2003 (‘the Privacy Code’) sets out, inter alia, the rules generally applicable to protection of consumers’ privacy in relation to electronic communications.

Generally speaking, network operators are allowed to collect and process personal data only if the users have given their prior consent to such activities following an ‘information notice’ from network operators, which must contain information relating to, inter alia, the purpose of the data collection and treatment, the subjects on which data could be transmitted and the rights of users to request the deletion of their data from the operators’ databases.

With regard to the treatment of users’ data, the Privacy Code states that network operators must delete users’ traffic data3 from their databases once such data ceased to be necessary for the purposes indicated to the user in the information notice. However, network operators are allowed to keep this data for a longer period if necessary for invoicing purposes (up to six months).

Network operators must also store data for the purposes of criminal prevention. The storage period varies depending on the type of data at issue. In particular, the storage period is:a 24 months from the date of the communication, in relation to traffic data; b 12 months, in relation to computer data; andc 30 days, in relation to unsuccessful calls.

The data to be retained includes the data required to, inter alia, trace and identify the source and the destination of a communication, identify the date, time and duration of a communication, and to identify the type of communication.

location data4 can be treated only if the user agreed to such treatment, provided that the user maintains his or her right to request the competent network operator to stop such treatment, even temporarily.

By resolution of 25 June 2009, the Italian Privacy authority set outs the general rules for the performance of profiling activity by providers of electronic communication services. In particular, the Privacy authority stated that:

Providers carry out profiling activities using personal data that are at times aggregated in accordance with pre-set criteria, which are established from time to time by the individual data controllers in the light of corporate requirements. The data in question may include multifarious

3 Data processed for the purpose of the conveyance of a communication on an electronic communications network or of the relative billing.

4 Data indicating the geographical position of the terminal equipment of the user of a publicly available electronic communication service.

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personal information such as contractual information and consumption data, which allows inferring additional information with regard to each data subject (e.g., consumption bracket, expenses by period and activated services per line).

With regard to such activity, the Privacy authority affirmed that:[…] profiling should be carried out by only using such data as is absolutely necessary to achieve the specific purpose, and in any case only by processing data that is the subject of an appropriate information notice provided by the data controller, who must also be in a position to provide proof of the data subject’s free, specific consent thereto – as per Sections 13 and 23 of the [Privacy] Code. The above principles apply not only if the data are specifically collected by a provider for the purpose in question, but also if profiling is performed by means of data that had been collected initially for a different purpose – including provision of the given services.

Moreover, profiling based on aggregate data5 is subject to the ‘prior-checking’ rule with the Privacy authority in order to verify the application of adequate measures for the protection of such data.

Failure to comply with the aforementioned legal requirements is punishable by the application of both administrative fines ranging from €6,000 to €120,000 and criminal sanctions ranging from six months’ to 36 months’ imprisonment.

Protection for childrenItalian law prohibits the broadcasting of programmes that, taking into account the time of the broadcasting, can seriously harm the physical, psychological or moral development of children or contain brutal violence or pornographic scenes.

In order to broadcast programmes containing the type of content indicated above, broadcasting companies must do so at an appropriate time or adopt other technical measures to prevent young persons from watching such programmes without warning (i.e., parental control systems). Such programmes must also be marked with a proper acoustic or visual signal. In any case, X-rated programmes cannot be broadcast free to air or on pay-tV between 7 a.m. and 11 p.m. on any broadcasting platform, while VM146 programmes cannot be broadcast between 7 a.m. and 10.30 p.m. Moreover, broadcasting companies must guarantee that programmes particularly directed to underage transmitted between 4 p.m. and 7 p.m. contain appropriate contents.

The protection for children is also pursued by the application of the Self-Regulation tV and Underage Code, which provides for specific rules directed to broadcasting companies for the protection of underage during tV programmes. The violation of the aforementioned applicable provisions may lead to (1) the application of fines, ranging from €25,000 to €350,000; (2) the suspension of a broadcasting licence for a period of between three and 30 days and (3) the disconnection of the broadcasting facility for a maximum period of 30 days.

5 Data derived from specific identifiable personal data, contained in several databases and system that continue to be available to the data controller.

6 Parental guidance content for minors under the age of 14.

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During 2009, aGCOM brought 57 proceedings and imposed administrative fines in 48 of them.

CybersecurityThe CNaIPIC (National anti-Crime Computer Centre for Critical Infrastructure Protection) is the public body responsible for cybersecurity of infrastructure operating in particular sectors, such as health care, transport, telecommunication and energy. CNaIPIC is a branch of the Italian police. It comprises two departments (operational and technical) and its purpose is to intervene to prevent and fight cyber attacks, cyber crime and industrial espionage.

In particular, protection of strategic infrastructures is carried out by the Italian police by creating an ‘external wall’ to already existing protection infrastructure, meaning an electronic protection system that monitors possible access anomalies and communicates them to CNaIPIC. In such a case, the latter will promptly inform any other entities of such anomalies.

The Italian police has also entered into various agreements with telecoms operators, providing for the exchange of data and information in order to prevent, detect and fight cyber attacks.

Emergency response networksThrough Resolution No. 26/08/CONS, aGCOM adopted a plan for numbering in the Italian telecoms sector. articles 12 and 13 of such Resolution set out specific rules in relation to numbering for emergency services and for public utility services. In particular, the Resolution states that numbers for emergency services (e.g., police, fire service, ambulance) are established by Prime Minister’s Decree, while numbers for public utility services (such as harbour offices or financial police) can be allocated directly upon request submitted to aGCOM. Such numbers are unique to the whole of Italy and users can call them free of charge. Operators have to ensure access to emergency service numbers either directly or by agreement with network operators.

In this regard, on May 2010, the EU Commission asked the European Court of Justice to fine Italy for not having implemented service-tracking caller-location information for 112 calls.7 In fact, pursuant to Directive 2002/22/EC of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (‘the Universal Services Directive’), EU Member States must ensure that a person dialling the European emergency number from a mobile phone can be located and that details about his or her location are sent to the competent emergency services. In order to comply with the European Commission decision, on June 2010 the Italian government started a pilot scheme for the implementation of the 112 emergency service. This scheme has so far been piloted in only one Italian province (Varese) for a period of six months.

7 The single emergency number in all EU countries.

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IV SPECTRUM POLICY

i Development

Radio spectrum is a limited but essential resource for telecoms operators. The management of radio spectrum is becoming a major issue both for operators and for political players at national and international levels. With regard to the foregoing, the trend that is emerging relates to a more flexible and market-oriented use of radio spectrum. In fact, while originally telecoms regulators were inclined towards a rigid division of spectrum in relation to each technology, in recent years the political agenda has begun to lean towards a more efficient use of spectrum resources.

Such goal has been and will be pursued by various means, such as the reallocation of spectrum resources (‘white spaces’) following the digital switchover.

ii Flexible spectrum use

Italy is the only EU country that so far is not planning to implement an auction for the reallocation of the ‘Digital Dividend’. In fact, aGCOM Resolution No. 181/2009/CONS states that the digital switchover from analogue tV broadcasting will finally result in a Digital Dividend of no fewer than five national broadcasting networks and one DVB-H network. Such dividend will be reallocated by means of selective procedures based on the criteria of proportionality, transparency and non-discrimination. Unlike many other countries (UK, Germany, etc.), the allocation of frequencies will not be subject to a public auction but will take place by means of ‘beauty contests’. These contests will be open only to tV broadcasting networks, thus so far excluding the participation of mobile network operators from the allocation of such free spectrum.

iii Broadband and next-generation mobile spectrum use

Only following the opinion by the Radio Spectrum Policy Group on the radio spectrum policy programme of 9 June 20108 is aGCOM now planning to make 300MHz of broadband available to mobile network operators by the end of 2015. Such spectrum resources should be made available by assigning to mobile operators some frequencies previously used for military purposes9 and reassigning to mobile operators frequencies previously assigned to other telecoms operators, but that they have not utilised. Indeed, a recent survey by the Italian Ministry for Economic Development revealed that national broadcasting companies use only 71 per cent of the spectrum resources assigned to them while local broadcasting companies use only 54.18 per cent of their spectrum resources, largely because of a lack of sufficient content to be put on air.

8 Stating that coordinated availability of the 800MHz band for electronic communication services other than broadcasting should be achieved in all the EU Member States by 2015.

9 The Decree by the Italian Ministry of Communications No. 27,877 of 2 October 2007 states that the Ministry of Defence must free a number of frequencies to be allocated to broadband services by 30 June 2014.

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iv Spectrum auctions and fees

On 27 June 2011, the Italian government published the notification of the public auction for the (new ltE) 4G mobile frequencies. The lots made available were as follows: six lots of 800MHz (the most appealing band), three lots of 1,800MHz, one of 2,000MHz and 12 of 2,600MHz. The Italian government was hoping to raise at least €2.4 billion from the auction and estimated it could raise as much as €3.1 billion with the sale of all the available frequencies. Only five Italian telecom operators were admitted to the public auction process, which began on 30 august 2011: telecom Italia Spa, Vodafone Omnitel NV, Wind telecomunicazioni Spa, H3g Italia Spa, and linkem Spa (the latter admitted with reservation). In September 2011, after 22 days of offers and counter-offers by the bidders, the government cashed in the total amount of almost €4 billion, of which about €3 billion derived solely from the adjudication of the six lots on the 800MHz band by the three largest telecom operators, while the remaining €1 billion was raised by the sale of the 1,800MHz and 2,600MHz frequencies, with only one lot on 2,000MHz left unsold. In the end, linkem was excluded by the adjudication, while H3g Italia succeeded in acquiring 25 per cent of the available frequencies, although none were on the most sought-after 800MHz. The tender made available to the Ministry of Communications a gain of about €1.5 billion (from the base budget of €2.4), of which it is hoped that at least half will be reinvested for the further development of the Italian telecommunications sector.

V MEDIA

i Restrictions on the provision of service

law No. 220 of 13 December 2010 (‘the Financial law 2011’) at Paragraph 11 of article 1, mandates the Ministry of Economic Development and aGCOM to set further obligations on the holders of radio frequencies assigned for the broadcast of audio-video content, demanding a more efficient use of the spectrum and the diffusion of regional and local culture. Once adopted, failure to comply with such obligations may bring to the revocation of the relevant authorisations. In Paragraph 12 of article 1 of the Financial law 2011, it is also established that, in case of digital broadcasting without authorisation, the party that is editorially responsible for the broadcast may be fined up to €2.5 million.

ii Digital switchover

By the end of the first half of 2011, 10 out of the 20 Italian regions had completed the switchover from analogue to digital transmissions. The Italian plan requires the switchover to be complete by the end of 2012. Digital television is now received by 70 per cent of Italian families.

aGCOM Resolution No. 300/10/CONS established the allocation of DVB frequencies. Such resolution provides for the establishment of 25 DVB networks (which includes 16 DVB-t ‘terrestrial’ networks and three DVB-H ‘handheld’ networks) and provides that at least one-third of the available frequencies must be reserved for local broadcasting networks.

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With the aim of expanding the number of incumbents in the market and also increasing competition, aGCOM adopted various resolutions containing the procedures for the allocation of tV frequencies and for the transfer of part of the transmission capacity to digital terrestrial networks.

By Resolution No. 181/09/CONS, aGCOM defined the criteria for the distribution of terrestrial digital frequencies among network operators by using the horizontal entry model (providing for three different qualifying models to enter the market: content provider, services provider and network operator) and the single frequency network technique (a network of several transmitters operating at the same frequency), thus increasing network efficiencies. Moreover, aGCOM established the rules for the allocation of spectrum frequencies in relation to the Digital Dividend in order to increase competition in the market and favour entry into the market of new operators.

Finally, aGCOM sets out the rules for the transfer of 40 per cent of the transmission capacity of DVB-t networks to new players. Such procedures are also intended to favour pluralism and competition in the market by providing the opportunity for independent content providers to access the market and offer high-quality products to the public.

With regard to state aid granted by the Italian government to companies operating on the media market, in 2004 and 2005 the Italian government offered incentives to citizens who bought or rented digital terrestrial decoders to receive television signals; people who chose satellite television instead of terrestrial tV did not benefit from such provisions. Centro Europa 7 and Sky Italia, two media companies operating on the Italian market, filed a complaint over the mentioned subsidies with the European Commission. In 2007, the EU antitrust watchdog ordered Italy to recover the subsidies, stating that such behaviour gave rise to competition distortions, and Mediaset challenged this decision. On 28 July 2011, the European Court of Justice finally ordered Mediaset to repay the state subsidies previously obtained in the sale of digital tV decoders. The European Court ruled that such subsidies constituted state aids incompatible with the common market.10

iii Internet-delivered video content

The increasing availability of broadband and high-speed Internet connections to consumers is leading to the rapid expansion of the market for Internet-delivered video content. The creation and consumption of video content through the Internet is emerging also thanks to other factors, such as the creation of high-quality content and the availability of affordable distribution platforms, as well as the growing habit of consumers to watch video contents via the Internet. The market for Internet-delivered and mobile video content in particular is expected to grow at a yearly rate of 65 per cent between 2002 and 2014.

10 Decision of the European Court of Justice, Third Chamber, 28 July 2011, Case C-403/10P Mediaset S.p.A. v. European Commission.

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In order to adapt to consumers’ needs and to control the consumption of video content, tV broadcasters and ISPs are developing a series of business models, the most important of which is IPtV.

IPtV allows users to access online video content through their Internet-enabled tV sets. The development of IPtV poses various challenges as well as benefits for ISPs and traditional tV broadcasters.

as to the challenges, the delivery of online video content raises issues of multi-territory rights licensing considering that online video contents could be – and often will be – transmitted through different jurisdictions and this could trigger the need to impose a single licensing standard. Moreover, ISPs and other network operators should operate to combat piracy and IP rights violations.

The major benefits of IPtV are, on the consumer side, the increase and diversification in the offer of video content and in the competition in the market for video content; and on the offer side, the increase in marketing opportunities for tV broadcasters and ISPs.

It is important to note, however, that the diffusion in Italy of IPtV, and more generally of Internet-delivered video content, is held back by the lack of availability of broadband network connections in various southern Italian regions.

Notwithstanding the emerging diffusion of IPtV, ISPs are still cut out from the business of commercial hosting; this is because dominant broadband operators (such as Fastweb and telecom Italia) tend to bundle their services with content distribution. aGCOM has qualified IPtV as an ‘emerging’ market, and has excluded the possibility of ex ante regulation of the market to protect affected companies such as ISPs and tV entrepreneurs; therefore, at present, ISPs hold only a small market share in the market for Internet-delivered video content.

iv Mobile services

Consumption of data and video contents via mobile is steadily increasing in Italy. UMtS users reached a record 34 million in 2010.

The number of SIM cards actually downloading or uploading data and USB data communication keys in the final quarter of 2010 reached 17.1 and 6.1 million units, respectively, with 16-fold growth since 2007, reaching 120PB (petabytes) of transmitted volume in 2010. In order to reduce the risk of network collapse, aGCOM is currently planning to make available an additional 300MHz of broadband for the mobile network by the end of 2015. as mentioned in Section IV, supra, such spectrum resources should be made available by assigning to mobile operators some frequencies previously used for military purposes and some frequencies previously assigned to other operators but unused by them.

VI THE YEAR IN REVIEW

On the transactions side, Russian operator VimpelCom carried out a $6 billion merger with Wind telecom, creating the world’s fifth-largest mobile company by subscriber base. Under the deal, the telecom assets of Egyptian billionaire Naguib Sawiris have been acquired, and VimpelCom will own, through Wind telecom, 51.7 per cent of Orascom

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telecom and 100 per cent of Wind telecomunicazioni Spa. The enlarged company will operate in 19 countries with more than 173 million mobile subscribers.

as regards to the latest actions brought by aGCM, two events are worth mentioning. First, apple is under investigation by aGCM for not complying with consumer laws that require companies to offer free two-year warranties for electronic products. Indeed, under EU law, apple is required to protect buyers with a minimum of two years’ protection on all consumer electronics (i.e., iPhone, iPad, apple tV and iPod devices), whereas apple offers a paid warranty with its appleCare service, going against regulations in Italy. aGCM asserted that it will take a decision on this matter probably at the end of 2011. Should apple be found guilty, a maximum fine of €500,000 could be imposed as consumers seek civil damages against the company.

Second, on 1 august 2011 the aGCM published the undertakings presented by telecom Italia, in the context of a proceeding started in May 2010 upon a solicitation by Fastweb, in relation to a potential abuse of a dominant position. The Italian incumbent, in case of participation in public tenders with starting value above €1 million, undertook, inter alia, to introduce a specific procedure on the issuance of feasibility studies for non-standard plant construction and to supply customers with the characteristics of the services offered by telecom Italia. The proceeding, brought for the violation of article 102 of the treaty on the Functioning of the EU, was opened to verify if the telco had refused to provide information and services needed from its competitors to present technical and economic offers competitive for non-residential customers, while instead making such information and services available to its internal departments.

VII CONCLUSIONS AND OUTLOOK

The Italian telecoms market is characterised by a sufficient degree of competition and pluralism, even if some sectors of the market (e.g., the broadcasting sector) appear to require further development and regulation in order to prevent – and in certain cases, eliminate – market distortions and competition restrictions. to this extent the recent decision by the EU courts mentioned above in relation to the subsidies for DttV decoders has significantly indicated which way is to be followed.

Moreover, the protection of consumers and operators seems to be one of the main concerns of the Italian government, which is currently planning to review the rules governing copyright protection to allow an adequate defence to authors of content broadcasting online. However, as previously mentioned, one of the main issues remains the completion of the switchover from analogue to digital tV and the subsequent allocation of the resulting Digital Dividend.

Wi-Fi coverage, currently limited to the most densely populated areas, remains another key issue. to make it possible for more consumers to access online content, the national legislator has partially moved to free up Wi-Fi access; but it still remains to be seen whether, given lobbying against this by certain interests, free access allowing a broader territorial coverage will actually be granted, as is the case in most industrialised countries.

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Appendix 1

About the Authors

STEFANO MACCHI DI CELLEREJones Daystefano Macchi di Cellere practises cross-border competition law, acting in merger and cartel cases before the eu antitrust authorities and assisting global enterprises on abuse of dominant position claims and investigations, as well as on private damages, unfair competition and intellectual property litigation; he has gained extensive experience in communications law representing international clients since the liberalisation of the industry, working with operators involved in fixed, mobile and satellite networks and services, and advising corporations on radio and television broadcasting, information technology and Internet communications.

Mr Macchi di Cellere is a regular author and speaker on antitrust and communications law topics and a contributor to the World bank’s Doing Business annual reports. he is a member of the Italian bar, the Law society of england and Wales, the International bar Association (Antitrust and trade and Communications Law Committees), the American bar Association (section of Antitrust Law), the Inter-Pacific bar Association (council member and chair of the Aerospace Committee, 1998 to 2000; vice-chair, 1996 to 1998) and the Alumni Association of the Academy of American and International Law (deputy secretary general, 1990 to 1991).

JONES DAYVia turati 16-1820121 MilanItalytel: +39 02 7645 4001Fax: +39 02 7645 4400smacchi@jonesday.comwww.jonesday.com