New guidance for telecom companies On 1 June 2023, the European Commission (EC) announced the adoption of updated Horizontal Block Exemption Regulations on Research and Development (R&D) and Specialisation agreements (HBERs), together with revised Horizontal Guidelines that will remain valid for 12 years.
HBERs safeguard certain horizontal agreements and practices from falling foul of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU), which notably prohibits cartels and other horizontal arrangements. The underlying assumption is that the agreements falling under the safe harbour are generally pro-competitive, i.e. they promote competition and economic welfare in line with the principles of the EU Internal Market, as outlined in Article 101(3) TFEU.
The Horizontal Guidelines (Guidelines) provide guidance on the implementation of HBERs and establish a framework for the assessment of horizontal cooperation agreements and concerted practices not benefiting from the safe harbour.
A noteworthy addition to the Guidelines is the inclusion of a new section specifically addressing mobile telecommunications infrastructure sharing agreements.
For the first time, the EC has provided explicit guidance on the conditions under which telecom operators may engage in network sharing agreements. The EC recognises the paramount importance of connectivity networks as a vital output for digitalisation and the digital economy. It also acknowledges that quality, coverage, innovation, and faster network roll-out can be effectively achieved through network sharing, while also considering environmental benefits such as lower emissions and a reduced ecological footprint.
This new section of the Guidelines provides comprehensive guidance on evaluating mobile telecommunications infrastructure sharing agreements, known as NSAs. Under these agreements, mobile network operators collaborate to share network infrastructure, operating costs, and expenses related to upgrades and maintenance. By pooling their resources, mobile network operators can offer mobile telecommunication services more efficiently and cost-effectively.
NSAs can encompass different levels of sharing. They may involve the sharing of basic site infrastructure, such as masts, cabinets, antennas, or power supplies, which is referred to as ‘passive sharing’ or ‘site sharing’. Additionally, operators may opt for sharing the Radio Access Network (RAN) equipment at the sites, including base transceiver stations or controller nodes, which is referred to as ‘active sharing’ or ‘RAN sharing’. NSAs may also provide for spectrum sharing.
Geographical segmentation may also be set forth in NSAs, where participating operators divide their responsibilities for installing, maintaining, and operating infrastructure and equipment within their respective territories.
The EC further recognises that NSAs can bring benefits such as cost reductions, improvements in quality, and increased choice, notably by fostering a faster deployment of new networks and technologies, wider coverage, and denser network grids, all of which can enhance the quality of services and promote a wider range of products and services. NSAs can also create competition opportunities that would not have existed otherwise.
In principle, the EC considers NSAs, including spectrum sharing, as not restricting competition by object, as defined in Article 101(1) TFEU, unless they serve as tools for engaging in cartels.
However, NSAs can also have restrictive effects on competition. They may notably limit infrastructure competition, which can subsequently limit competition in the provision of mobile telecommunications services, both at the wholesale and retail levels, with potential impacts on the quality of service and pricing at the wholesale and retail levels.
Additionally, NSAs may curtail the independence of participating operators’ decision-making and hinder their ability or motivation to engage in infrastructure competition with one another, restricting innovation, technological advancements, and the differentiation of products and services, thereby limiting competition between participating operators.
In cases where participating operators are competitors, the exchange of commercially sensitive information between them can likewise raise competition concerns if this information exchange exceeds what is objectively necessary and proportionate to implement the agreement.
Therefore, NSAs require assessment on a case-by-case basis, considering a number of factors such as the type and depth of sharing, the scope of shared services and technologies, the purpose of the sharing, the duration and structure of the cooperation established by the agreements, the geographic scope and market coverage of the NSA, the characteristics and structure of the relevant market, as well as the number and identity of participating network operators.
While an assessment based on these factors is always case-specific, helpfully, the EC also provides a set of minimum conditions that operators must comply with to minimise the risk of anti-competitive effects. These conditions include that each operator control and manage their own core network, and maintain independent retail and wholesale operations, enabling each operator to set prices, determine product and bundle parameters, and differentiate their services based on quality and other relevant factors. Additionally, each operator must pursue independent spectrum strategies. Lastly, the exchange of commercially sensitive information must be strictly limited to what is necessary for the proper functioning of mobile infrastructure sharing, and appropriate safeguards must be in place where necessary.
These Guidelines are a crucial instrument for propelling the digital transformation forward as they offer telecom companies valuable guidance. However, considering the swift advancements in diverse technological domains, it remains uncertain whether the existing Horizontal Guidelines will prove adequate for the forthcoming 12-year period or if additional adaptability will be needed.
 The Horizontal Guidelines were published on 21.07.2023. Cf. https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52023XC0721(01).