Opening the borders: why Ukraine’s integration into the EU digital single market is under threat

What changes should be made to the powers of a new market regulator?

At the end of October, the Verkhovna Rada adopted a draft law #6055 “On the National Commission for State Regulation in the Spheres of Electronic Communications, Radio Frequency Spectrum and Provision of Postal Services of Ukraine” in the first reading. The regulatory body mentioned in the document should become the legal successor of the National Commission for State Regulation of Communications and Informatization (NCCIR). Gleb ShchegolIT and Telecom sector expert at the Better Regulation Delivery Office (BRDO)said why the regulation in this sector should be changed, how that procedure affected Ukraine’s integration into the EU and the European digital market, and what we could do to avoid losing this chance in a conversation with Mind.

Joining the EU digital single market is one of Ukraine’s strategic goals after signing the Association Agreement with the European Union. This market covers several areas of activity, including electronic communications. The agreement provides a potential opportunity for our state to obtain a so-called internal market regime for this sphere. In other words, Ukraine has a chance to join the EU digital single market under the conditions that apply to the member states even before joining the EU.

Why do we need to change the regulator?

Ukraine is currently implementing the latest legislation in the sphere of electronic communications at the same time as the EU countries. For example, on December 16, 2020, the Law “On Electronic Communications” drafted with the participation of BRDO experts was adopted. The law will enter into force on January 1, 2022. However, the full implementation of the Directive (EU) 2018/1972 of 11 December 2018 establishing the European Electronic Communications Code requires the adoption of a law on the national regulator in the sphere of electronic communications.

With regard to national regulatory authorities in the sphere of electronic communications, EU legislation requires EU member states first and foremost to ensure and guarantee their independence (political and financial one, independence from any individual or legal entity providing electronic communications services, and independence from any other authority when it comes to the tasks assigned to regulators under national legislation).

Under the Law “On Telecommunications” that will be no longer in effect on January 1, 2022, the NCCIR is the state regulatory authority in the sphere of telecommunications in Ukraine. This regulator is not so “independent”. It is under the authority of the President and reports to the Verkhovna Rada.  It is financed from the state budget, and it has to coordinate its own decisions with other state bodies and register them with the Ministry of Justice.

The chairman and members of the regulator are appointed and dismissed by the president, and the candidates are selected without an open competition, ie this process is not transparent. Such a procedure for appointing the chairman and members does not comply with European rules. Moreover, the Constitutional Court found it inconsistent with the Basic Law of Ukraine.

What is wrong with the draft law?

It is possible to eliminate these discrepancies with EU legislation by adopting the law on the national regulator in the sphere of electronic communications.

However, draft law #6055 “On the National Commission…” registered in the Verkhovna Rada in September this year contains some provisions that undermine the independence of the sectoral regulator, do not comply with the Constitution of Ukraine and the obligations under the Association Agreement with the EU, threaten the implementation of the reform provided for by the Law “On Electronic Communications” and Ukraine’s chances to integrate into the EU digital market.

In particular, these are the provisions of the draft law regarding:

  • the influence of the Expert Digitalization Council under the President of Ukraine on the appointment and dismissal of members of the regulator;
  • unsatisfactory conclusions (with no relevant criteria) of the Expert Digitalization Council under the President of Ukraine or the relevant Verkhovna Rada committee on the regulator’s activity results for the previous year as one of the grounds for early dismissal of members of the regulator;
  • providing the regulator with adequate technical, financial, and human resources to perform its tasks;
  • powers of the regulator regarding mandatory identification of subscribers and IMEI register maintenance;
  • delaying the formation of the new regulator on a competitive basis until 10/01/2023 and extending functions of the regulator composed of members appointed in June 2021 in violation of the Constitution of Ukraine;
  • delaying the receiving of functions of the central executive body in the sphere of electronic communications by the Ministry of Digital Transformation until 01/07/2023.

What aspects are affected by the proposed provisions?

Experts of the Better Regulation Delivery Office (BRDO) submitted their proposals on the necessary amendments to draft law #6055 to the relevant Verkhovna Rada committees and the Government, and also tried to draw the President’s attention to them. The adoption of the law without taking them into account will negatively affect not only Ukraine’s European integration plans.

Due to the imperfect statutory provisions in the sphere of electronic communications and their inadequate implementation in Ukraine, the state regulation of the entire sector is still ineffective. After all, consumers suffer the most.

For example, today:

  • the introduction of new technologies is delayed compared to EU countries;
  • the regulation of settlement rates for incoming international traffic transit services is still in effect;
  • there is no Internet coverage in many small towns and highways;
  • there is no system for monitoring the quality of mobile communications;
  • consumers do not have the tools to compare the offers of service providers in terms of cost, quality, and geographic coverage of services; there is no pre-trial dispute resolution mechanism;
  • some consumers still can not afford Internet and voice services;
  • service providers impose paid content services on consumers;
  • a number portability service is not implemented in fixed networks;
  • technological neutrality and radio frequency sharing are prohibited;
  • telecommunications operators still have infrastructure access problems;
  • some regulatory acts (about 170) necessary for the implementation of the new law have not been approved.

What transformations does the sector need?

Full implementation of the sectoral reform of the electronic communications market will allow Ukraine to integrate into the EU digital single market, facilitate the development of the entire sector and improve the protection of the rights of consumers of electronic services. For this purpose, the state should finally begin to actively promote the sector transformation through a few specific steps: it is necessary to immediately develop and approve bylaws stipulated by the Law “On Electronic Communications”, adopt the law on the regulatory authority, establish the regulatory authority, and select its members under the European Electronic Communications Code and the Constitution of Ukraine.