Regulatory Challenges related to Mobile Gaming – Part 3

Non-cached browser-based games, which usually require considerable bandwidth than games utilising caching, depend largely on the speed and quality of the mobile telephony service which the player is subscribed to. If a player loses connectivity in the middle of a game, or if he is frustrated by the slow speed of data transmission, he is certain not to return to the mobile medium for his gambling experience.

Another factor which has a bearing on the uptake of mobile gambling is the price of mobile data transmission. Undoubtedly, the cost of playing a game through a mobile phone is a concern which may hinder the penetration of this service.

The part of the article discusses these issues and the legislation which attempts to regulate mobile networks and services with the aim of ensuring quality access to mobile telephony and data transfer services, therefore enabling the player to access his favourite games anywhere and at any time.

The challenge for regulation in ensuring a high quality of standard for mobile telephony and data transfer services is that the speed, quality of data transmission and connectivity through mobile networks is dependent on many factors, and therefore regulation attempting to control this must target all these component factors at once.

At the EU level, a number of significant amendments1 to the framework of legislation which regulates electronic communications services have addressed the subscriber’s contracts, the manner in which operators of mobile networks and services control the transmission of traffic, the quality of international connectivity, and use of the radio frequency, as described below. These must be transposed into the national legislation of each Member State by the 26th of May of 2011.

The national authorities in Member States empowered to regulate electronic communications, now have the possibility to set and enforce minimum quality of service standards on an operator of public communications networks.2 Furthermore, the operator must inform his subscribers of any measures used to control the transmission of traffic within their network, by for example prioritising certain forms of traffic.3

The same national regulatory authorities in all Member States have been given the power to carry out investigations, to request information and to commission audits in order to assess the level of security and integrity of a publicly available electronic communications network/service.4 This is also relevant to the integrity and continuity of service of the international links which connect the networks in one country to those in the neighbouring countries, and internationally. A failure of one such international link may have a significant impact on communications within a country, and the power of the regulator to assess and audit these international connections on a regular basis is an essential regulatory tool.

The changes with regard to radio frequency spectrum relate to enhancing the efficient use of spectrum. Radio frequency spectrum refers to the radio waves which build a cellular network and are used to carry signals to and from a mobile phone. Different parts of the radio spectrum are used for different radio transmission technologies and applications, and there are specific spectrum bands which are used for mobile data transmission, in conjunction with technologies such as GSM (2G)5 and UMTS6 (3G).

Radio frequency spectrum is a scarce resource, generally controlled by Government, and allocated to operators of mobile networks for a limited time under stringent terms and conditions which are established at the European level. The amendments to the regulatory framework have introduced new provisions for spectrum management which call for technology and service neutrality, so that (subject to certain conditions), the licensee of a particular spectrum band does not need to be restricted to one type of technology, or to the provision of one type of service. By way of an example, this means that an operator with a license to use a particular spectrum band for GSM technology is not prohibited from using the same spectrum band for UMTS technology. The operator can therefore invest in new and innovative products without being hindered by his spectrum license, thus, ensuring better service and better speeds of data transfer.

The amendments also provide that certain frequency bands must now be traded. As technologies become more efficient, a mobile network operator may require a narrower spectrum than he had originally been granted. Keeping in mind the fact that spectrum is generally licensed for at least ten years, at very high rates, the possibility to trade unused spectrum is a big step forward, allowing other operators to purchase that spectrum to improve an existing service, or to create a new competing service, whilst allowing the original holder of the spectrum more liquidity to invest in innovate products. In all cases, this should result in a better service.

The introduced amendments to the electronic communications network should act in a concerted fashion to guarantee better quality and speed of mobile access and data transfer across Europe; however, what appears to be a solution in theory can at times not operate quite as well in practice. Quality and speed may not depend completely on the operator of the network, it may not be easy to transfer to a new technology despite the legislation, and the holder of a spectrum license may prefer to hold on to its rights than transfer them to a competitor. Nonetheless, these measures are step in the right direction for the better regulation of the mobile telephony service and consequently for the mobile player.

The national authorities in Member States entrusted with the regulation of electronic communications generally watch over prices within the markets which they have the power to regulate. These markets are defined by the European Commission7 and the national regulatory authority can only regulate a market not defined by the Commission in very specific circumstances. It must be noted that at the date of writing, access to the mobile network at a retail level is not a regulated market8, and therefore the national regulatory authorities in Member States do not have the power to regulate and/or to investigate retail mobile prices. Retail prices for mobile telephony and data transfer can therefore only be challenged if it can be proven that the provider of the services is acting in an anti-competitive manner by making ‘monopoly profits’ to its subscribers or by fixing prices in a concerted fashion with the other providers of mobile telephony services within the market.

On the other hand, prices of voice calls and data transmission when roaming within Member States in the EU have been specifically fixed by the European Commission by virtue of the “Roaming Regulation”9. Prices for voice calls and SMS have been capped at both the wholesale and retail level.10 Likewise, the SMS service has been capped at wholesale level at €0.04 per SMS message, and at retail level the cost which the subscriber must pay for sending one SMS cannot exceed €0.11, whereas the receipt of an SMS must be free of charge.11 Data roaming prices have been regulated at wholesale level, and at the 1st of July 2010, the wholesale rate which the operator of a visited network may levy from the operator of a roaming customer’s home network cannot exceed €0.80 per megabyte transmitted. This will drop further to €0.50 by the 1st of July 2011.12 Additionally, measures have been put into place whereby a subscriber can put a financial limit on data roaming services, and will be informed when he has almost reached that limit.

It is submitted that the Roaming Regulation goes a long way towards reassuring the mobile player that, regulatory considerations aside, he could continue to play his favourite games when travelling within the EU.

1 Directive 2009/136/EC of the European Parliament and of the Council of 25 November 2009 amending Directives 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services, Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector and Regulation (EC) No 2006/2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws and Directive 2009/140/EC of the European Parliament and of the Council of 25 November 2009 amending Directives 2002/21/EC on a common regulatory framework for electronic communications networks and services, 2002/19/EC on access to, and interconnection of, electronic communications networks and associated facilities, and 2002/20/EC on the authorisation of electronic communications networks and services .

2 Directive 2002/22/EC of The European Parliament and of The Council of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (Universal Service Directive), as amended, Article 22(3).

3 Ibid., Articles 20(1)(b) and 21(3)(d).

4 Directive 2002/21/EC of The European Parliament and of The Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive), as amended, Article 13a.

5 “Global System for Mobile communications”, a second generation mobile phone technology which enables text messaging and low speed internet access.

6 “Universal Mobile Telecommunications”, a third generation mobile phone technology which enables faster data transmission and new features such as video calling.

7 Commission Recommendation of 17 December 2007 on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services, available here.

8 Ibid.

9 Regulation (EC) No 717/2007 of the European Parliament and of the Council of 27 June 2007 on roaming on public mobile telephone networks within the Community and amending Directive 2002/21/EC

10 Ibid., Sections 3&4.

11 Ibid., Sections 4a and 4b.

12 Ibid., Section 6a(4).