Conditions on the Swiss telecommunications market are quite stable. While in the fixed broadband market the traditional telecom operators, as well as CATV providers and public utilities, are pushing forward development and deployment of broadband networks, the mobile telecommunications market is still dominated by three mobile operators: Swisscom, Sunrise and Salt. Another remarkable development affecting the Swiss mobile market was the government's announcement of the release of further mobile RFes for use by mobile operators as from 2019. This announcement is a response to the constantly increasing volume of data transmitted on mobile networks and the expected launch of the next mobile communication standard, 5G.
In the media sector, the approval by the competition as well as media supervisory authorities of the joint venture between the Swiss Broadcasting Corporation SRG SSR, Swisscom and Ringier in the field of joint marketing of advertising content still attracts wide public attention and draws criticism from market players as well as economic and legal experts. The Swiss Federal Administrative Court (FAC) declared the supervisory authority's approval of the joint venture void. This decision was appealed against, and the appeal proceedings before the Swiss Federal Tribunal are currently pending.
On the legislative side, the revised Swiss Federal Act on the Surveillance of Mail and Telecom Traffic (BÜPF) came into force in March 2018. Further, a draft proposal for the revision of the Swiss Federal Telecommunications Act (TCA) was issued by the Swiss Federal Council on 6 September 2017. On 20 June 2018, the Federal Council launched a legislation process for the new Federal Act on Electronic Media, which shall replace the existing Federal Law on Radio and Television (RTVA). The Federal Council's efforts to combat cybercrime through implementation of various measures, both at the legislative level and through state action, must be mentioned. Further, the Swiss people have clearly rejected the No Billag initiative (see Section VI.ii), which would have meant the abolition of federal television and radio fees and would have led to a profound change in the Swiss media landscape.
i The regulators
The relevant regulatory framework for telecommunications services in Switzerland is set forth mainly in the TCA and its implementing ordinances (Ordinance on Telecommunications Services (OTS), Ordinance on Telecommunication Installations, Ordinance on the Addressing Resources of Telecommunications Services, Ordinance on Frequency Management and Radio Licences), the BÜPF and its implementing ordinance (VÜPF), the RTVA and its related ordinance (RTVO), as well as, in respect of antitrust matters, in the Swiss Cartel Act (CartA).
The Federal Communications Commission (ComCom) is the regulatory authority in the telecommunications market, and currently has seven members. The Federal Council elects the members, who must all be specialists in the field.2 Despite being elected by the Federal Council, the members of ComCom are independent of directives of the Federal Council. The tasks of ComCom include, inter alia, the granting of licences for the use of RFs, the award of universal service licences and the setting out of access conditions if telecommunications service providers fail to reach an agreement. ComCom produces annual reports about its activities for the attention of the Federal Council. ComCom may seek the assistance of the Federal Office of Communications (OFCOM).3
OFCOM, in particular, ensures the compliance of market participants with the law and their telecommunications licences, and is competent to issue those telecommunications licences in respect of which ComCom is not competent. If OFCOM detects infringements of the telecommunications law, it shall intervene and order corrective measures that may include restriction, suspension or withdrawal of a licence (or propose such measure to ComCom if ComCom is the licensing authority).4
The Swiss Competition Commission (ComCo) is the Swiss regulator in antitrust matters in accordance with the CartA. ComCom may have to consult with ComCo and seek its opinion on potential effects on the telecommunications markets if the question of (potential) market dominance becomes relevant for ComCom in its application of the TCA. This may, in particular, be the case in connection with the determination by ComCom of the terms of interconnection and access agreements if the providers are unable to reach an agreement by themselves, as well in connection with the grant of radio telecommunications licences that, according to the TCA, must not eliminate or significantly restrict effective competition. Moreover, ComCo may come into play in the telecommunications markets in cases of unlawful restraints of competition or unlawful practices of dominant undertakings, or in cases of concentrations of undertakings if the relevant statutory turnover thresholds are met.5
ii Regulated activities
In Switzerland, anyone who wishes to use the RF spectrum must obtain a licence.6 Any licence applicant must have the necessary technical capacities, and undertake to comply with the applicable legislation, in particular the TCA and the RTVA, the relevant implementing ordinances as well as the licence conditions.7 While ComCom is the licensing authority for nationwide radio communications licences, OFCOM is competent in respect of the grant of other licences of somewhat lesser importance, such as point-to-point frame relay licences.
A licence can only be granted if sufficient frequencies are available under the National Frequency Allocation Plan. A radio communications licence shall, as a rule, be granted on the basis of a public invitation to tender if enough frequencies are not available to meet all applicants' current and future needs.8 This is usually the case in respect of nationwide radio communication licences. The licence grant procedure shall respect the principles of objectivity, non-discrimination and transparency, and shall ensure the confidentiality of all information provided by applicants.9 If more applicants participate than licences are available, the process is usually conducted by means of an auction procedure, although it would also be possible for the authorities to launch a 'beauty contest', where the specific qualitative and quantitative criteria of the applicants would be assessed and measured.
A ComCom licence is also required to provide a universal service.10 In respect of the grant of such licence, an invitation to tender shall also be issued, and this tender procedure shall also be in line with the principles of objectivity, non-discrimination and transparency. However, if it is clear from the outset that the tender will not proceed under competitive conditions, or if no suitable candidates are available, ComCom may appoint one or more undertakings as providers of the relevant universal services.11
Otherwise, the regulation of the Swiss telecommunications market is rather liberal. The TCA only requires a provider that intends to offer telecommunications services in Switzerland to notify OFCOM.12 The OTS provides a number of clarifications of, and exceptions to, such duty of notification. Exempt from the duty to notify OFCOM are, inter alia, foreign providers of international telecommunications services that use other providers (having notified their services to OFCOM) to terminate their connections in Switzerland.13
The radio and television market is subject to more intense regulation. The RTVA, for instance, requires anyone who intends to broadcast a Swiss programme to notify OFCOM, and to obtain the relevant licence14 issued by the Federal Department on the Environment, Transport, Energy and Communications (UVEK).15 In addition, the law imposes on broadcasters a number of restrictions in terms of content and advertising16 as well as fee-splitting and coverage areas.17 Moreover, licensed broadcasters have to pay an annual licence fee.18
iii Ownership and market access restrictions
Swiss telecommunications law is, as a rule, liberal, and it does not impose high entry barriers. As already explained, the only formality to be fulfilled by telecommunications service providers is the notification of OFCOM. Only those who intend to provide a universal service or to use the frequency spectrum require a licence.
Swiss telecommunications law does not, as a rule, preferentially treat Swiss entities over foreign telecommunications providers. Ownership restrictions apply in respect of mobile telecommunications licences in that the granting of such licences may not eliminate or materially restrict competition,19 which means, in practical terms, that one and the same operator cannot (directly or indirectly) hold more than one licence entitling it to operate a nationwide mobile telecommunications network. Consequently, any application by an operator for a second nationwide mobile telecommunications licence would have to be disregarded, and should two providers that each hold such licence merge, they would have to return one licence.
According to the Federal Telecommunications Operator Act (TUG), the Swiss Confederation must hold a majority stock in the incumbent, Swisscom,20 which is the successor of the former PTT Telecom. This is a somewhat hotly disputed statutory provision, as many market players consider that the fact that the Swiss Confederation is still the majority owner of the incumbent increases the risk of its giving preferential treatment to Swisscom over competitors that are completely privately held.
The RTVA provides that any licence applicant must, as a rule, be resident or domiciled in Switzerland. No provider shall hold more than two television licences and two radio licences. In addition, in the absence of any international obligations to the contrary, any operator controlled from abroad or with foreign participation may be refused a licence if the corresponding foreign state does not grant reciprocal treatment.21 Moreover, the RTVA sets out specific statutory provisions for the Swiss Broadcasting Corporation (SRG SSR), which is the national radio and television broadcaster. SRG SSR shall fulfil a constitutional mandate in the field of radio and television and provide a service for the Swiss community.22
iv Transfers of control and assignments
According to the TCA, every transfer of a licence requires the consent of the licensing authority. A consent of the licensing authority must also be sought in the case of an economic transfer of a licence (i.e., in the case of a change of control in the licence holder).23 ComCom's consent is required in the case of a transfer of a universal licence and a nationwide radio communications licence, while a transfer of other radio licences must be approved by OFCOM.
A transfer of a radio or television licence under the RTVA requires the consent of the UVEK.24 A consent is also needed in the case of an economic transfer of the licence, which is, under the RTVA, deemed to be given if more than 20 per cent of stock in the licence holder is transferred.
Clearance may also be needed under the CartA if the relevant turnover thresholds are met. In addition, merger control clearance is also needed, irrespective of the turnover of the undertakings concerned, if one of the undertakings concerned has been held, in a final decision pursuant to proceedings under the CartA, to be dominant in a market in Switzerland, and if the concentration concerns either that market or an adjacent or upstream or downstream market.25
III TELECOMMUNICATIONS AND INTERNET ACCESS
i Internet and internet protocol regulation
Under Swiss law, a telecommunications service means the transmission of information for third parties by means of telecommunications techniques (i.e., by sending or receiving information, through fixed or mobile networks, by means of electrical, magnetic or optical signals or other electromagnetic signals).26 Internet services, in particular VoIP services, thus qualify as telecommunications services, and are subject to regulation in accordance with the statutory provisions of the TCA and the pertaining implementing ordinances.
Against this background, providers of telecommunications services over the internet are, for instance, required, like other providers:
- to make the relevant notification to OFCOM;
- to have the required technical capabilities for the provision of the services in question;
- to comply with the provisions of the TCA and the pertaining ordinances to ensure price transparency;
- to respect specific pricing conditions for value-added services;
- to ensure the confidentiality of the communications of their subscribers; and
- to ensure access to emergency services.
In respect of the latter, however, the law foresees some relief for VoIP providers in that correct routing of emergency calls, if not technically possible for every location, must be ensured only for calls from the main location identified in the subscription contract.27
ii Universal service
The universal service licence, which was valid until the end of 2017, was awarded to Swisscom by ComCom. In December 2016, ComCom awarded to Swisscom a renewed universal service licence for the period from 2018 to 2022. ComCom abstained from conducting a public tender because a survey had revealed that none of the other providers was interested in obtaining the licence and providing the universal service.
The universal service comprises, inter alia, the public telephone service, access to emergency call services and the data transmission service.28 The various universal services are subject to price regulation and may not exceed the prices set out in the OTS.29
At the choice of the subscriber, the universal service provider must provide universal services by means of a connection to a fixed network termination point that includes a voice channel, a telephone number, an entry in the public telephone service directory and broadband internet access with a guaranteed transmission speed of 2000/200kbit/s.30
The state does not subsidise the development of broadband infrastructure such as FTTH, such development being pushed forward by the market players. Apart from the traditional telecommunications and CATV providers, public utilities have also entered the broadband infrastructure market. According to the Federal Office for Statistics, as at June 2017, 45.8 out of 100 households had subscribed to broadband services, which exceeds the OECD average of 30.6 out of 100 households.
iii Restrictions on the provision of service
As discussed above, the universal licence holder is bound by statutory maximum prices.31 Likewise, value-added services are subject to certain statutory price ceilings.32 Other than that, retail prices are not regulated in the Swiss telecommunications market. Providers are, however, obliged to ensure price transparency. They must, in particular, inform a caller if, in the case of a call between customers of different mobile telecommunications providers, higher prices are charged than for calls to the same provider's customers. The same duty of information applies if customers are charged higher prices for calls to numbers in company-wide telecommunications networks than for calls to numbers with geographical codes.33 These duties do not apply in the case of value-added services, international calls and international roaming.
At the wholesale level, providers of telecommunications services with a dominant position in the market must provide other providers access to their network and services in a transparent and non-discriminatory manner at cost-oriented prices. The forms of access to be granted include:
- fully unbundled access to the local loop;
- fast bitstream access for four years;
- rebilling for fixed network local loops;
- leased lines; and
- access to cable ducts, provided sufficient capacity is available.
On the other hand, there is no obligation to ensure access in relation to the broadcasting of radio and television programme services.34 Interconnection services to be provided in accordance with Swiss law include:
- the origination, termination and transit of calls;
- identification of the calling line and of the connected line, and suppression of this information;
- access to value-added services; and
- the physical connection between the telecommunication installations of different providers as required for the connection of the services.35
Non-discrimination means that the dominant provider must not treat other providers less favourably than its own business units, subsidiaries or other partners, and that the difference between the access prices offered by the dominant provider and its end-customer prices would allow another (comparable and efficient) provider to achieve cost-covering revenues.36
Determination of a cost-oriented price is a rather complex matter, and the OTS provides detailed guidance.37 The underlying principle is that the dominant provider shall ensure that its calculation of the access price is based on the costs that an efficient provider would incur, on a forward-looking basis. Such costs shall correspond to the replacement costs of modern equivalent assets. To determine such costs, the long-term additional costs of the network components used, as well as the long-term additional costs caused by the access services, shall be taken into account. The dominant provider may then add, on top, a premium calculated as a proportional share of the relevant joint and common costs (the constant mark-up) as well as a return, at a rate customary in the market, on the capital used for investments.38 The OTS also foresees a certain price floor.39
If telecommunications services providers (TSPs) do not agree within three months on the access conditions, ComCom shall determine the conditions at the request of one party and based on the proposal made by OFCOM. ComCom shall, in particular, take into account those conditions that would promote effective competition, as well as the effects of its decision on competition in the market.40
With few exceptions, prices are not regulated in Switzerland. (Mobile) telecommunications operators are generally free to determine their prices, including wholesale (such as mobile termination rates (MTRs)) and retail prices. Particularly, MTR and international roaming prices have given rise to discussions and calls for regulatory intervention. However, to date, the regulatory authorities have not intervened in respect of MTRs, as the view prevails that reductions of MTRs over time as determined by operators have so far resulted in lower retail prices, thus meaning that regulatory intervention has not been necessary. However, the TCA would allow ComCom, based on a request from an operator, to regulate MTRs (or other types of interconnection or access) on a cost basis if another operator is held to be dominant in the relevant market. Since the Swiss Competition Commission has already found that the nationwide mobile networks of each operator are to be seen as a distinct product market where every operator has a market share of 100 per cent, it cannot be excluded that, in future, the authorities will hold the mobile operators to be dominant and oblige them to interconnect, in particular, to offer MTRs at regulated cost-based prices. As regards international roaming, some developments are underway that are discussed in Section VI.
Chapter 7 of the TCA is about telecommunications security and data protection. The basic rule is that no one who provides (or has provided) a telecommunications service may disclose to a third party information relating to its subscribers' communications or enable a third party to do so.41 This basic rule is complemented by a number of further provisions regulating the secrecy obligations in more detail, such as rules on unfair mass advertising, use of location data, outsourcing of data processing, caller line identification, the use of traffic data, and protection against unauthorised interception and interference.42 In addition, the provisions under the Data Protection Act that aim to protect personal data of individuals and legal entities apply.
The protection of minors is dealt with in the OTS. The pertaining rules provide that telecommunications service providers shall prevent access by persons under 16 years (provided their age is known to the provider) to value-added services, as well as SMS and MMS services with erotic or pornographic content. To determine whether access shall be prevented, providers of mobile telecommunications services shall, upon conclusion of a new telecommunications services contract or the sale of telecommunications equipment, record the age of the principal user if he or she is less than 16 years of age; and request, in the case of doubt, the production of a valid passport or other identity card allowing the age of the user to be assessed.43
Surveillance of telecommunications traffic is subject to the BÜPF and the VÜPF. The BÜPF applies in cases of criminal investigations, in the context of the Federal Act on International Judicial Assistance in Criminal Matters as well as in the context of a search for a missing person. It applies to all telecommunications service providers (holding a licence or being obliged to notify their services) as well as ISPs. It entitles the competent authority to order a wide range of measures that may facilitate the relevant investigation or search.44 The revised BÜPF came into force on 1 January 2018 and introduced the following main changes:
- Extension of scope of the BÜPF: the revised law applies to a much higher number of service providers (TSPs). In particular, providers of derived communication services that permit one-way or multiple-way communication (e.g., email services, chatrooms, providers of platforms, OTT service providers, retailers of SIM or similar cards) is subject to the revised statute, as are individuals and companies that open their access to telecommunication networks to third parties, for example by means of wireless LAN access (e.g., providers of company networks or public access points).
- New obligation for resellers of SIM cards: the duty to identify purchasers and retain copies of their passport, ID, or Swiss residence or work permit.
- Establishment of a centralised data processing system, instead of the former system of physical transmission on a data storage device from the Surveillance Office to the prosecution authority.
- Duty to disclose information about telecommunication services: broader and specific information about telecommunication services customers must be collected and stored until six months after termination of the business relationship.
- Surveillance duties for TSPs: stricter surveillance duties have been introduced. Upon request by the Surveillance Office, TSPs must provide access to their premises and systems, and disclose identification data, the content and traffic data of specific telecommunication and telecommunication marginal data in real time. A retention period of six months applies.
- Surveillance duties for other companies and individuals: non-TSPs have to comply with limited duties, but must tolerate surveillance measures and, upon request, permit access to their data processing systems.
- Non-compliance and sanctions: upon request of the Surveillance Office, TSPs have to prove, at their own cost, that they comply with the BÜPF and are in a position to fulfil their obligations. A fine of up to 100,000 Swiss francs has been introduced for non-compliance with various provisions of the revised BÜPF.
In September 2017, the revised Federal Intelligence Service Act (NDG) came into force. The NDG regulates the tasks, activities and competencies of the Federal Intelligence Service (NDB) and the duties of other authorities and private operators. The goal of the NDG is to detect and prevent imminent dangers to national security (e.g., by terrorism, prohibited foreign intelligence activities or attacks against critical infrastructure). Besides the surveillance of postal and telecommunications traffic based on the BÜPF that the NDB can order a TSP to perform, the NDB can request cable network operators to support the NDB with regard to technical access information, transmission of signals and the removal of applied encryptions in the context of cross-border transmissions.45 Private operators can challenge an order to cooperate before the FAC.46
Swiss law provides specific rules for services in extraordinary circumstances and restrictions on telecommunications traffic in such circumstances. In particular, TSPs may be ordered to provide, in such circumstances, specific services to cover the telecommunications needs of the armed forces, civil defence, police, rescue services and civilian authorities, including services under the universal service, high-speed data transmission, leased lines and pager services.47 Further, the Federal Council or the UVEK, respectively, may order the surveillance, restriction or interruption of telecommunications services if an extraordinary situation or vital national interests so require.48
No specific law is in force for the combating of and protection against cyberattacks. Under current legislation, rather, various provisions can be found in the different laws that can be seen as (also) addressing, at least indirectly, the cybercrime issue. The TCA, for instance, requires that telecommunications services must be of high quality, competitive in the international context and reliable. In addition, the Data Protection Act requires that personal data (of both individuals and legal entities) be protected by appropriate measures. It is up to providers to ensure compliance with these legal requirements, thus providing a certain level of protection against unauthorised access to and use of telecommunications data.
OFCOM has published a (currently non-binding) Guideline on Security and Availability of Telecommunication Infrastructures and Services49 recommending TSPs to implement, monitor and update an information security management system as described in international standards relating to information security, a business continuity plan and a disaster recovery plan, and to comply with international security recommendations in the ICT sector.
The obligation of telecommunications service providers to immediately inform OFCOM of major disruptions of their networks50 has been specified by OFCOM in its Technical and Administrative Prescriptions for the Reporting of Network Faults:51 operators have to include into their report, inter alia, a description of the disruption, the categories of causes (cable rupture, energy, hardware, software or human failure, cyberattack, malicious interference) and the measures taken to end the disruption.
The Swiss Federal Council acknowledges that cyberattacks are a serious threat to the entire Swiss society and that the current legislation is insufficient to cope with the relevant risks. Therefore, in April 2018 it launched a new national strategy for the protection of Switzerland against cyber risks.52 On 18 April 2018, the Federal Council adopted the newly developed National Strategy for the Protection of Switzerland against Cyber Risks (NCS) for the years from 2018 to 2022. The strategy builds on the work of the first NCS (2012 to 2017), expands it where necessary and complements it with new measures to address today's situation. The strategy defines seven aims:
- development of competencies, knowledge and abilities to recognise and assess cyber risks at an early stage;
- development of measures to reduce cyber risks;
- creation of capacities and organisational structures to combat cyber incidents;
- Switzerland's resilience to cyber risks with regard to critical infrastructures, services and goods;
- protection against cyber risks should be perceived as a joint task of society, the economy and the state;
- commitment to international cooperation to enhance cybersecurity; and
- cyber incidents shall be carefully analysed and appropriate measures shall be taken on the basis of the findings.
To achieve the strategic goals, various measures shall be implemented in different areas. The NCS distinguishes 10 fields of action (such as, e.g., competence and knowledge building; standardisation and regulation; criminal prosecution; and cyber defence), which address various aspects of cyber risks. A total of 29 measures are defined in these fields of action (such as, for example, expansion and promotion of research and educational competence; examination of the obligation to report cyber incidents; creation of a central cybercrime department; and the ability to implement active measures in the cyber space in accordance with the NDG).
IV SPECTRUM POLICY
The Swiss frequency spectrum is managed by OFCOM, which takes appropriate measures to ensure that the spectrum is used efficiently and without interference. OFCOM shall further ensure equitable access on the basis of the National Frequency Allocation Plan, which is subject to approval by the Federal Council.53
As of 1 January 2018, OFCOM published its updated frequency spectrum strategy, which is part of the National Frequency Allocation Plan.54 The goal of the paper is to discuss how the frequency spectrum might be used by radio services in the near and distant future, and analyses aspects such as:
- the availability of the frequency band for commercial and non-commercial applications;
- allocation of the frequency band to one specific mobile service or to multiple services;
- the requirement to obtain a licence for the utilisation of the frequency band;
- harmonisation of the frequency band; and
- the availability of frequency ranges for civil or military use.
The Swiss frequency spectrum strategy identifies a number of strategic moves. The overall strategic step in respect of frequency management is a move away from the command and control principle towards market-controlled instruments, with the aim of meeting the expectations of market players that future use of frequency will provide the greatest possible flexibility. In respect of public mobile telecommunications, Switzerland shall harmonise the frequency bands as per pan-European standards in order to keep pace with technical developments such as the introduction of LTE-advanced versions (allowing for, e.g., data transfer rates per sector up to 1GBit/s in the downlink and 500MBit/s in the uplink), as well as the strategic performance targets for the long-term development of UMTS through to the fourth generation (International Mobile Telecommunications-Advanced) as developed by the standardisation organisation 3GPP. Another strategic measure encompasses the harmonisation of civil and military applications with the long-term goal of ensuring joint use of the frequency ranges by civil and military users.
ii Spectrum auctions and fees
As a rule, the use of radio telecommunications licences is subject to a fee imposed by the licensing authority. The fee shall be calculated on the basis of:
- the frequency range allocated, the class of frequency and the value of the frequencies;
- the bandwidth allocated;
- the territorial scope; and
- the temporal scope.
If a licence is granted by way of an auction, the licence fee shall correspond to the amount of the bid, less administrative charges for the invitation to tender and the granting of the licence. The licensing authority may determine a minimum bid. In addition, the licence holder is subject to administrative charges that shall cover the costs of the competent authority for its decisions and services, for example in connection with:
- the registration and surveillance of providers;
- decisions concerning access, interoperability or the joint use of installations;
- the granting, surveillance, amendment and cancellation of universal service licences and radio telecommunications licences; and
- the management, assignment and revocation of addressing resources.55
To respond to the further demand for transmission capacity triggered by the constantly increasing volume of data transmitted on mobile networks, in June 2018 ComCom launched the tender procedure to allocate new mobile networks. The auction is expected to be held in January 2019 and shall be designed to allow all interested companies to participate in and bid for the frequencies for the 5G rollout. The frequencies are to be allocated for 15 years. ComCom aims to ensure that consumers in Switzerland will continue to have access to high-quality, innovative and cost-effective mobile communications services in the future. The following frequencies will be part of the auction: 700MHz, 1,400MHz, 2,600MHz and 3,500–3,800MHz.56
i Restrictions on the provision of service
Transmission of information by means of telecommunications techniques, including the transmission of radio and television programme services, is regulated under the TCA.57 Content, on the other hand, is subject to regulation by the RTVA. Supervision under the RTVA is split between OFCOM and the Independent Complaints Authority (ICA).
While OFCOM ensures that the RTVA (including its implementing ordinances) and the relevant licence terms and international treaties are complied with, the ICA shall deal with complaints about the content of programmes.58 The RTVA, however, provides that the ICA may not undertake any supervisory measures regarding production and preparation of programme services, thus not allowing any kind of censorship. Likewise, the ICA is not permitted to order provisional measures (such measures potentially being available through requests for protective measures before the state courts). Further, the ICA does not act ex officio, and becomes active only upon complaints having been lodged against radio and television programmes.59
The Federal Council has launched the legislative process for the enactment of a new media law called the Federal Act on Electronic Media (BGeM). The new Act shall replace the RTVA (see Section VI.ii).
ii Digital switchover
Legislation in Switzerland favours switchover from analogue to digital content. The must-carry obligations for specific programmes were abolished as per the end of 2014, and in respect of one specific programme as per 21 March 2015.60 Further, the RTVA does not oblige cable network operators and other telecommunication services providers to offer, in parallel, digital and analogue techniques. Telecommunications providers with mere digital offerings (such as Swisscom TV) are not obliged to also make an analogue offering. To further the provision of digital content, cable network operators are also permitted to focus exclusively on digital programmes, provided, however, the cable network operators make a basic digital offering that is comparable with the analogue offering and does not cause extra cost for subscribers.61
According to a presentation made by representatives of the national Swiss broadcaster SRG SSR and representatives of private radio stations, the industry plans to phase out FM radio broadcasting by 2024. By 2024, all radio programme services in Switzerland shall be broadcast only digitally, and mainly on DAB+ platforms.62 This development is progressing: since spring 2016, digital radio use is higher than that via VHF. This will allow the gradual switch-off of VHF to begin as planned in 2020. On 25 October 2017, the Federal Council adopted a partial revision in the radio and telecommunications sector to facilitate this transition. It also decided that the current radio licences should be extended. In spring 2017, digital radio use (DAB+ and internet) accounted for 57 per cent of total usage, which is 8 percentage points more than in autumn 2015, while VHF use fell to 43 per cent in the same period.63
The shift to digital transmission in Switzerland is thus ongoing, and a continual increase in the quality and variety of providers' offerings is expected.
iii Internet-delivered video content
Use of digital techniques enables providers to deliver and further develop customised services such as VOD and time-shifting and replay services that, due to the availability of broadband internet at affordable prices in nearly all of Switzerland, are accessible by the vast majority of Swiss users. While in times of traditional analogue broadcast of radio and television programmes, consumers were dependent on fixed schedules and the content provided by providers, the new techniques allow a shift towards individualised consumption of radio and television content.
iv Mobile services
The growing demand for mobile media services has resulted, in particular, in the introduction of the new mobile frequencies in the 700MHz, 1,400MHz, 2,600MHz and 3.5GHz ranges (see Section IV.ii) as well as in the Swiss Radio Spectrum Strategy (see Section IV.i). The rollout of more sophisticated networks using new generation protocols such as LTE enables providers to provide mobile services carrying broadband content.
VI THE YEAR IN REVIEW
i Market developments
On the Swiss media market, the joint venture (under a Swiss corporation called Admeira Ltd) of Swisscom, SRG SSR and private media undertaking Ringier for the joint marketing of advertising content has been the source of controversy and criticism. The planned concentration was notified with ComCo for merger control purposes. On 16 December 2015, ComCo issued its decision, according to which it approved the concentration. It argued that while the collaboration between these three important market players would create a strong new undertaking, it would still not eliminate effective competition, so that according to the applicable law, the concentration has to be approved. However, OFCOM issued an interim order in accordance with the RTVA preventing SRG SSR from entering the market and exploiting new advertising activities such as targeted advertising under the joint venture. On 28 February 2016, the Federal Department of the Environment, Transport, Energy and Communications (DETEC) then gave the green light for the joint venture to move on from a media law perspective. However, in its decision of the same date, OFCOM maintained its position. The case subsequently had to be assessed by the FAC, which declared on 29 September 2016 DETEC's approval of the joint venture void in proceedings initiated by the Swiss Media Association and several media companies not being part of the joint venture.
The FAC has ordered that DETEC has to reopen the assessment of whether SRG SSR's joint venture activity may be subject to conditions or prohibited; and admit the complainants (the Swiss Media Association and several media companies) as parties to such assessment procedure. The background is that DETEC is bound by statutory law64 to impose conditions on or prohibit an SRG SSR activity if it adversely affects the fulfilment of SRG SSR's constitutional programme service mandate or substantially limits the development potential of other media undertakings in Switzerland. In November 2016, SRG SSR appealed the FAC's decision with the Swiss Federal Tribunal, which in February 2018 protected the decision of the FAC, and ruled that the merger of SRG SSR, Swisscom and Ringier by participating in the Admeira joint venture company was void and that the merger proceedings had to be repeated, granting party rights to its competitors and to the Swiss Media Association.65
The joint venture and its approval by the regulatory authorities were subject to wide coverage in the media, and led to strong criticism from market players as well as economic and legal experts. The joint venture raised, in particular, concerns as to the participation of undertakings owned by, and under the control of, the Swiss Confederation in liberalised markets. While SRG SSR is generating its income from mandatory reception fees that every Swiss household has to pay, Swisscom can essentiality benefit from a parent guarantee from the state, given that its majority stock is held by the Swiss Confederation. Moreover, in a set-up where state-owned undertakings participate in the markets, the state itself is operating in various functions – as owner, regulatory or supervising body and customer – thus triggering complex governance structures and issues.
As a consequence of the decision of the Swiss Federal Tribunal and the strong criticism from stakeholders, SRG SSR subsequently sold its 33 per cent stake in Admeira in June 2018 to Swisscom and Riniger.
Mention must be made of the merger of AZ Medien and Neue Zürcher Zeitung, and the takeover of media marketer Goldbach by Tamedia. ComCo has raised no objections to either project.66
In February 2018, Sunrise submitted an application for regulated access to a virtual unbundled local access line (VULA). VULA is an alternative to physical unbundling and resembles a bitstream offering. With VULA, a continuous broadband data connection can be provided from the local exchange to the customer, also via a hybrid line (consisting of optical fibre and copper cable). ComCom rejected Sunrise's application in its decision of June 2018. According to ComCom, Sunrise's aim would stimulate competition, which would be welcome; however, due to the lack of a legal basis, ComCom does not see itself to be in a position to approve the application.67 With this statement, ComCom is now passing the ball to the Parliament, which, as part of the ongoing revision of the TCA, has the option to introduce the obligation to grant technology-neutral and virtual access to the network of a market-dominant operator.
On 19 November 2014, the Swiss Federal Council issued a report on recent developments in the Swiss telecommunications market and on challenges for the Swiss legislator resulting from such developments. The Federal Council proposes a number of revisions to the TCA. DETEC prepared a draft amendment to the TCA. The draft was published as part of a public consultation process where the cantons, political parties and further interested undertakings were invited to submit their comments. Following the consultation, the Federal Council issued a draft proposal for the revision of the TCA on 6 September 2017. The draft legislation will now be dealt with by the Transport and Telecommunications Commission of the National Council.
The Federal Council's proposed amendments to the TCA relate to the following topics:
- definition of the term TSP and the notification duties of providers;
- improvement of the net infrastructure;
- safeguarding of services diversity;
- international roaming;
- protection of consumers and young people; and
- security of telecommunications equipment and installations.
Under the draft, the term TSP is proposed to be defined more widely so as to also cover those providers who use the internet for new business proposals and business models that would otherwise not be subject to regulation. On the other hand, the current duty of TSPs to notify themselves to the regulator would be abolished, as the supervision of providers by the regulator would be strengthened.
In respect of the net infrastructure, the initial proposal by the government to give ComCom competence to intervene ex officio if it becomes aware of an apparent violation of the access regime was abolished due to strong criticism during the consultation. Pursuant to the draft, as of today, ComCom shall intervene only if so requested by a party. For the improvement of access conditions to the broadband infrastructure, the draft proposes that the Federal Council may implement rules for dominant providers to grant to other providers technology-neutral access to the local loop, which may include introducing price limits. In respect of mobile networks, the draft intends to achieve a more flexible usage of the spectrum that is available to operators, as well as improvements in respect of the joint use of the infrastructure by operators. The revised law also provides basic rules and principles regarding the administration and use of internet domain names, in particular of the top-level domain '.ch'. Finally, the Federal Council proposes that the supervision of providers in respect of the availability of their networks and their services should be strengthened, and that the Federal Council shall have the power to request operators to implement measures that increase the resilience of their network infrastructure.
In respect of net neutrality, the draft follows a conservative approach for the time being, proposing that operators shall have the duty to disclose to the public if certain types of content are treated differently, thus increasing transparency in this area. Further measures are reserved for the future should this become necessary. Finally, the liability of operators (which is currently dealt with by a separate legislative initiative) shall be strengthened, and the proposed rules include the duty of an operator to block unlawful content if so requested by the authorities.
In respect of international roaming, the draft enables the Federal Council to combat disproportionately high end user prices.
The draft further proposes new rules that allow increased protection against unfair practices in telemarketing and to restrict, for example, spoofing. In respect of protection of young people, the new law shall provide for a duty of providers to advise customers on protective measures.
The draft also proposes new statutory provisions on technical measures for equipment and installations to ensure conformity with the relevant EU directives. Further, the monitoring and intervention rights of the authorities shall be strengthened to allow for more efficient measures against jammers.
The Swiss Confederation shall remain the majority shareholder in Swisscom. The Federal Council thus continues to allow the conflict arising from the fact that, on the one hand, it is the majority shareholder of the largest provider in the Swiss telecommunications market and, on the other, that it is the legislator, regulator and supervising authority of such market.
It is to be expected that the present draft legislation will be subject to amendments. In July 2018, the Transport and Telecommunications Commission of the National Council, which is dealing now with the draft legislation, called for the incorporation of the principle of signal integrity. Without the consent of the organiser, telecommunications service providers shall in future only be permitted to disseminate programme signals simultaneously, unmodified and in full. In particular, the Commission's aim is to allow Swiss TV channels to negotiate themselves the conditions for the inclusion of their programmes in time-shifted television with the TV broadcasters concerned. Further, the Commission is not satisfied with the conservative approach regarding network neutrality. According to the Commission, telecommunication service providers shall be obliged to guarantee network neutrality to end-consumers and thus to treat content and data equally in telecommunications transmission.68
On 4 March 2018, the Swiss population voted on the No Billag initiative, which intended to abolish radio and television broadcasting fees and clearly rejected the initiative (71.6 per cent of the population). Billag collects the reception fees on behalf of and for the account of the Swiss Confederation from private households and companies.69 According to the initiative committee, no one should be forced to pay compulsory fees for services that they do not use at all. The opponents of the initiative, to which both the Federal Council and the majority of the Parliament belonged, saw in the initiative the cancellation of the public service mandate, the existential endangerment of many television and radio stations, the threat of dependence on international corporations and private funding sources as well as an impairment of media diversity and opinion-forming in Switzerland. As a result of an intense voting campaign and public criticism of the SRG SSR, measures were announced to increase efficiency and save 100 million Swiss francs over the next four years, including through a reduction of approximately 250 full-time jobs.70
On 20 June 2018, the Federal Council granted approval for the opening of the consultation on the draft of the new BGeM. Interested parties had until 15 October 2018 to submit their comments. The new law is intended to enable online media to contribute to and promote public media services in addition to radio and television. A full public service mandate for the SRG SSR shall be maintained, while other private media providers will continue to receive funding for media services relevant to the free formation of opinions. A new state-independent commission shall be set up to issue the work assignments and supervise the assignees. This should ultimately serve a diverse, complete and high-quality Swiss media landscape. The new law is intended to replace the existing RTVA. This reorganisation is considered necessary because progressive digitalisation has led to a change in media offerings and use.71
Further, on 1 June 2018 the Federal Council submitted its report regarding state-recognised digital identities to the Parliament.72 With a state-recognised digital identity, users should be able to use the internet safely and with full control over their own data. The Federal Council therefore wants to issue clear rules for digital proof of identity (E-ID). The Parliament will have to decide how to proceed with this proposal.
VII CONCLUSIONS AND OUTLOOK
The Swiss telecommunications market may be deemed liberal. The law does not provide for high entry barriers for service providers, except in the mobile telecommunications sector where, due to the scarcity of frequency spectrum, a licence is needed to use frequencies and operate mobile networks. Notwithstanding liberalisation, the incumbent, Swisscom, has been successful in maintaining a uniquely strong position, and in particular in the mobile sector, where it still owns a market share of around 60 per cent. This uniquely strong market position may be maintained at least in the mid-term, as the legislator has no plans to implement legislatory measures that may strengthen competitive pressure on Swisscom.
The joint venture between SRG SSR, Swisscom and Ringier was scrutinised by ComCo and the media regulatory authorities, both from a competition and media law perspective. As a consequence of the decision of the Swiss Federal Tribunal, which ruled that the merger of SRG SSR, Swisscom and Ringier is void and that the merger proceedings have to be repeated, SRG SSR sold its stake in the joint venture to Swisscom and Ringier.
MTRs and international roaming pricing systems remain two heavily debated issues. The current law does not allow ex officio or ex ante intervention by the regulator. The revision of the TCA, which the Federal Council initiated by issuing its report on the telecommunications market at the end 2014, does not foresee any material change to the current MTR and national roaming pricing systems. The legislator continues to prefer refraining from further intervention in this field, and to allow the market to determine prices and relevant conditions. It will be interesting to see whether the expectations of the legislator will be met in this regard, and whether prices will reach levels seen in EU Member States without any specific legislatory moves.
By rejecting the No Billag initiative, the Swiss people have committed to the current system of federal television and radio fees and thus to preserve the financing of SRG SSR with state funds. This will continue to provide SRG SSR with a significant advantage in competition with foreign TV providers.
1 András Gurovits is a partner and Victor Stancescu is an associate at Niederer Kraft Frey Ltd.
2 Article 56 of the TCA.
3 Article 57 of the TCA.
4 Article 58 of the TCA.
5 If in the financial year preceding the concentration the undertakings concerned together reported a worldwide turnover of at least 2 billion Swiss francs, or a turnover in Switzerland of at least 500 million Swiss francs, and at least two of the undertakings concerned each reported a turnover in Switzerland of at least 100 million Swiss francs.
6 Article 22, Paragraph 1 of the TCA.
7 Article 23, Paragraph 1 of the TCA.
8 Article 24, Paragraph 1 of the TCA.
9 Article 24, Paragraph 2 of the TCA.
10 Article 14, Paragraph 1 of the TCA.
11 Article 14, Paragraphs 3 and 4 of the TCA.
12 Article 4, Paragraph 1 of the TCA.
13 Article 3 of the OTS.
14 Article 3 of the RTVA.
15 Article 45 of the RTVA.
16 Article 4 et seq. and Article 9 et seq. of the RTVA.
17 Article 38 et seq. of the RTVA.
18 Article 22 of the RTVA.
19 Article 23, Paragraph 4 of the TCS.
20 Article 6, Paragraph 1 of the TUG.
21 Article 44 of the RTVA.
22 Articles 23 and 24 of the RTVA.
23 Article 24d of the TCA.
24 Article 48 of the RTVA.
25 Article 9, Paragraph of the CartA.
26 Article 3 of the TCA.
27 Article 30, Paragraph 1 of the OTS.
28 Article 15, Paragraph 1 of the OTS.
29 Article 22 of the OTS.
30 Article 16, Paragraph 2 of the OTS.
31 As per Article 22 of the OTS.
32 As per Article 39 and 39a of the OTS.
33 Article 10 of the OTS.
34 Article 11 of the TCA.
35 Article 61 of the OTS.
36 Article 52 of the OTS.
37 Articles 54 to 54c of the OTS.
38 Article 54 of the OTS.
40 Article 11a of the TCA.
41 Article 43 of the TCA.
42 Articles 45a to 45c and 46 of the TCA.
43 Article 41 of the OTS.
44 See, in particular, Articles 13 to 15 of the BÜPF.
45 Article 43 of the NDG.
46 Article 83 of the NDG.
47 Article 47 of the TCA and Article 90 of the OTS.
48 Article 48 of the TCA and Article 94 et seq. of the OTS.
49 Guideline on Security and Availability of Telecommunication Infrastructures and Services: www.bakom.admin.ch/dam/bakom/de/dokumente/richtlinien_zur_sicherheitundverfuegbarkeitvonfernmeldeinfrastru.pdf.download.pdf/richtlinien_zur_sicherheitundverfuegbarkeitvonfernmeldeinfrastru.pdf, last accessed on 29 August 2017.
50 Article 96 of the OTS.
51 Technical and Administrative Prescriptions for the Reporting of Network Faults: www.bakom.admin.ch/dam/bakom/en/dokumente/tc/technologie/sr_784_101_113_18meldungvonnetzstoerungen.pdf.download.pdf/sr_784_101_113_18reportingofnetworkfaults.pdf, last accessed on 29 August 2017.
52 National Strategy to Switzerland against Cyber Risks 2018-2022: https://www.newsd.admin.ch/newsd/message/attachments/52071.pdf, last accessed 13 September 2018.
53 Article 25 of the TCA.
54 Swiss National Frequency Allocation Plan and Specific Assignments, accessible at www.bakom.admin.ch/dam/bakom/de/dokumente/fp/frequenzen/nationaler_frequenzzuweisungsplan2017.pdf.download.pdf/, last accessed on 29 August 2017.
55 Articles 39 and 40 of the TCA.
56 See ComCom press release, dated 6 July 2018: https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-71493.html, last accessed 13 September 2018.
57 Article 2 of the TCA.
58 Article 86, Paragraph 1 of the RTVA.
59 Article 86, Paragraphs 2, 4 and 5 of the RTVA.
60 Article 8a of the Ordinance of UVEK on Radio and Television in conjunction with Article 54, Paragraph 1-bis of the RTVO.
61 See also the OFCOM press release on must-carry obligations dated 13 May 2013: www.bakom.admin.ch/bakom/en/homepage/electronic-media/technology/broadcasting-by-wire/the-must-carry-obligation.html, last accessed on 29 August 2017.
62 OCFOM press release, dated 1 December 2014: www.bakom.admin.ch/bakom/en/homepage/electronic-media/technology/digital-transmission/digital-radio-plans-phase-out-of-fm.html, last accessed on 29 August 2017.
63 See OFCOM press release, dated 25 October 2017: https://www.admin.ch/gov/en/start/documentation/media-releases/media-releases-federal-council.msg-id-68513.html, last accessed 13 September 2018.
64 Article 29 of the RTVA.
65 Swiss Federal Tribunal 2C_1024/2016 of 23 February 2018.
66 See ComCo press release, dated 16 August 2018: https://www.weko.admin.ch/weko/de/home/aktuell/medieninformationen/nsb-news.msg-id-71835.html, last accessed 13 September 2018.
67 See ComCom press release, dated 22 June 2018: https://www.comcom.admin.ch/comcom/en/Homepage/documentation/media-information.msg-id-71242.html last accessed 27 August 2018.
68 See Transport and Telecommunications Commission of the National Council press release, dated 4 July 2018: https://www.parlament.ch/press-releases/Pages/mm-kvf-n-2018-07-03.aspx?lang=1031, last accessed 13 September 2018.
69 The annual income from television and radio licence fees amounts to approximately 1.4 billion Swiss francs.
70 See SRG SRR press release, dated 28 June 2018: https://www.srgssr.ch/de/news-medien/news/einsparungen-partnerschaften-und-neue-prioritaeten-bei-der-srg-ssr/, last accessed 13 September 2018.
71 See OFCOM press release, dated 21 June 2018: https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-71213.html, last accessed 13 September 2018.
72 See Federal Council press release, dated 1 June 2018: https://www.admin.ch/gov/de/start/dokumentation/medienmitteilungen/bundesrat.msg-id-70962.html, last accessed 13 September 2018.