By the end of this year, the Czech Republic has to introduce new rules for the bundling of telecommunication services. Operators will not be allowed to extend contracts only because you have ordered a TV offer in addition to internet connection.
A rather widespread practice of telecommunication operators involves a combination of several services in one bundle for a single price. Typically, this combines internet connection service and internet TV service or operators offer a mobile phone with the tariff contract. Such bundles of services may bring benefits to customers. The principal benefit is usually a lower price.
However, the provided benefits may not be suitable for every customer, as each benefit is usually counterbalanced by something else. For example, a commitment to purchase all services in the bundle for a certain time period. At worst, a customer does not receive information on all conditions and has no idea what he/she has committed himself/herself.
The bundling of common purchase of services into bundles causes complications to customers, in the form of additional costs when they change service provider, and sometimes it makes it impossible to terminate the purchase of services.
Bundles of services are for the first time discussed in the European Electronic Communications Code. It is a directive of the European Parliament and EU Council adopted in December 2018 that the Czech Republic is supposed to transpose to its legal system by 21 December 2020. The English version is available at this link.
The rules for the regulation of bundles are contained in Article 107 of the European Code. They belong to the category of rules applicable to the protection of end user rights. EU member states are therefore obliged to transpose them to their national legal regulations in the same extent to ensure an identical level of protection throughout the Union.
The Czech Ministry of Trade and Industry introduced a draft of the transposed amendment to the Act on Electronic Communications. Currently, the draft is subject to an inter-ministerial comment procedure. The proposed regulation of bundles was included in new Section 63c which is systematically part of the rules stipulating rights and obligations of entrepreneurs, participants, consumers, and end users.
Who is the target group of the legislation?
The legislation primarily aims to protect consumers. In addition to consumers, it offers identical protection to micro-enterprises, small enterprises or non-profit organisations provided they do not explicitly waive the entitlement for such protection. In other words, small enterprises must keep an eye on non-waiver of their rights when entering into contract with the telecommunication operator.
“Micro-enterprise” is any business with less than 10 employees and a turnover not exceeding EUR 2 million. A small enterprise is a business with less than 50 employees and a turnover not exceeding EUR 10 million.
Legal protection will not apply to contractual relations with large business entities where it is generally expected that they will be able, as professionals in business relationships, to agree on balanced business terms and conditions.
What are bundles of services?
A hard nut to crack in interpretation for practice may be the term of bundle of services itself. This term does not have any allocated special legal definition. The European Code suggests that there may be two types of bundles in principle. A bundle composed of several types of services or a bundle of services which includes terminal equipment (e.g. mobile phone, set-top box, or modem).
In terms of substance, at least one of the principal electronic communication services is needed for the existence of the bundle. It means either internet connection service, or “publicly available interpersonal communication number-based service”. Terminologically, these are new terms, however in practice it is a triplet of telecommunication services – fix telephone, mobile call and internet connection.
The bundle may be completed with certain other services falling within the regulation of telecommunications and services subject to other regulation, for example audio-visual media services at request (usually internet video libraries).
In line with the directive, a bundle is formed when individual parts of it are provided or sold by the same provider under one contract or based on closely relating or related contract. There may be unclarity in practice as to what are closely relating or related contracts.
If the operator provides all its services under one contract, it is beyond doubt that rules on the bundle will apply to such product scheme. The remaining question then is, under what conditions it is considered a bundle of services in case that a customer purchases several services based on individually concluded services.
How customers will be protected?
- In bundles of services, customers are provided with protection on several levels. The Electronic Communications Code enhances the requirements for transparency of the contractual relationship. The provider of the bundle must publish its contractual conditions in which it must describe, among other things, the rights of customers relating to the termination of bundles or their parts.
- In addition to the publication of the conditions, the provider has an obligation to present a brief easily comprehensible summary of the contract to the customer before the contract conclusion. The scope of the summary may not exceed the required length of one A4 page, and no more than three A4 pages when it is a bundle.
- In bundles of services, it is obligatory to state the price of individual components of the bundle when they are also offered separately. It should provide customers with complete and concise information on the offered bundle of services and on what benefits it will bring. As a result, there should not be any situations when customers do not know under what conditions they may terminate the contractual relationship or when customers face unpleasant surprises.
- The most significant element of the protection is the entitlement to terminate the commitment relating to any component of the bundle before the end of the agreed period. Customers will have the right to terminate the entire contract provided they have the right to terminate one of the services in the bundle. As such, it is not a general right to terminate a contract without the provision of reasons for the termination.
- It will be possible to get released from the bundle only if the provider causes reasons to do so. The proposed legislation states defective performance or another breach of the contract as possible reasons. A breach of the contract that comes into consideration may be the failure to inform the customer on obligations relating to the purchase of the bundle of services. The operator must provably provide information on all conditions of the service, including obligations and potential fines.
- Additionally, customers are entitled, by law, to terminate the contract if the operator makes
a unilateral change in conditions. In both these cases, the customer will be entitled to terminate the entire contractual relationship for all services in the bundle.
- To facilitate the change in the provider, the legislation will contain the ban on automatic extension of the contract term. This has a practical impact for an additional ordering of services based on the existing contract.
- The contract term will not be extended if additional services are subsequently ordered to the internet connection service (e.g. internet TV) or if a terminal equipment is ordered to telephone tariff. The operator will not be entitled to contractually bind customers for another definite time period (e.g. 24 months) only due to the fact that customers started to use another service.
- To extend the term of the original contract, the operator will always have to obtain customer’s consent.
- Other protective mechanisms that we know of from the current legislation will apply to services in the bundle. Customers are protected by the limitation to maximum period of contracts for definite time periods where this time period cannot exceed 24 months for a particular electronic communications service.
- When changing providers, customers are protected by the rules of number portability which will apply, in an adjusted form, to the change in the internet access provider.
The article was published on the lupa.cz on 30 April 2020.