Tech & Comms - 2021 Challenges, Opportunities and Predictions

The enforced global lockdowns have put a spotlight on the importance of Tech & Comms infrastructure, which was pivotal in supporting the ongoing operations of many businesses following the seismic shift to remote working across the world. We have seen more of our clients embrace the power of new technologies such as AI, 5G and IoT and have helped them define their roles in the digital economy where moving, storing and understanding data is key. Governments have also attempted to exert control over tech providers, data and digital business though regulation, competition tools and taxation, developing new regulatory regimes as they look to catch up with the innovations and advancements being progressed by Tech businesses and the users of Technology.

So what will 2021 bring? We have asked our Tech & Comms experts from across the globe to predict the challenges and opportunities they expect their clients to face across four closely related focus areas: Data, Infrastructure, New Technology and Regulation. 

Lawyers from our offices in Australia, Belgium, China, Czech Republic, Finland, France, Germany, Hong Kong, the Netherlands, Poland, Singapore, Spain, Sweden, the United Arab Emirates, and the United Kingdom have highlighted a range of developments in areas such as Artificial Intelligence, Cloud, 5G, Data Risks, Digital Tax, Diversity & Inclusion, eSignatures, SEP Frand Litigation, Space & Satellites, and Remote Working, reflecting the broad experience of our global team both in respect of the underlying technological changes and their impact on society.

Previous editions of our annual predictions series can be accessed here: 2020, 2019, 2018.

New Technology:

Artificial Intelligence
Autonomous Vehicles
Blockchain
Digitalisation of business processes & changes in Cloud contracting
Distributed Cloud
French IT Box Tax
Know Your Customer: Automated process for financial service provision
Remote Working
Shifting landscape in SEP FRAND litigation – 2021 will see hard fought disputes in India and China
Technology Transfers
Two-factor authentication

Data:

Asia Data Risks
Cyber Security
Data Driven Societies
Data Localisation
Data Security & Data Protection
Digital Assets and Data in the EU
Digital Tax
eCommerce Import Tariffs
Diversity & Inclusion
ESG: the path forward
Open Source Software & Open Data
Payments
Privacy Shield
Withholding Tax

Regulation:

COVID-19 Impact on online behaviour and technology usage
Database Directive
Data Governance Act
Data Protection in the Middle East
Digital Platforms Regulation
Digital Services Act
EU Electronic Communications Code (EECC)
German Telecommunications developments
Personal data localisation requirements
Telecoms Code

Infrastructure:

Belt, road and space
Data Centre Tax Considerations
5G
Space & Satellites

New Technology

Artificial Intelligence 

We are seeing an increasing number of practical applications for Artificial Intelligence (AI). In most cases, AI is part of a computer program that is made available either under license or in a SaaS model. Usually the manufacturer of such a program offers standard rules of liability for defects.  However, the part of the software that uses AI often contains modules pre-trained by the vendor. Both from the point of view of responsibility for the computer program and compliance requirements, the purchaser of such a solution should obtain information about the  data sets used for such training, the training methods, and the quality control methods used. This requires a change in the standard approach to preparing and negotiating contracts for implementing IT solutions with AI elements.

Tomasz Zalewski, Partner, Warsaw

The EU vehicle type approval framework has been overhauled by Regulation (EU) 2018/858 which came into force on 1 September 2020. It contains special type approval procedures for new technologies and new concepts. There will be an increasing trend for vehicle manufacturers to invest in self-driving technology and the European Commission recently published guidelines together with EU Member States to harmonise the ad-hoc safety assessments for the exemption procedure for EU approval of automated vehicles. 

Lawrence Freeman, Senior Counsel, Brussels

Blockchain

2021 promises to herald the long-awaited “blockchain spring” for this disruptive technology.  On the private blockchain side, vendors have developed more robust proprietary solutions for customers to implement and customers are more educated about the pros and cons of this technology and the best use cases to deploy them for.  The combination of better technologies and better informed customers will help drive growth in this space.  Better data exchange and recording (what some commentators refer to as the “Internet of Record”) will continue to be the best use case for blockchain technologies. On the public blockchain side, we expect more and more technology companies to try to launch public blockchain protocols that enable interoperability between such protocol and other private or public blockchain networks.  This will create an “internet of blockchains” which will enable even better data exchange.  Lots to be excited about!

Further reading: Bird & Bird & Blockchain

Jonathan Emmanuel, Partner, London

Digitalisation of business processes & changes in Cloud contracting

The global COVID-19 pandemic, lock-down and remote working influenced two key trends in 2020 which will likely continue in 2021. The first is the accelerating digitalisation of business processes, especially electronic signatures used in all internal and external business processes (from KYC, through internal or project approval of documents, to filing offers and entering into binding contracts), which has also meant that, in many jurisdictions and except where they are legally necessary, contracting practices such as ‘in person’ completion meetings and the use of hard copy documents and ‘wet ink’ signatures are now rare and will become even rarer in future. The second trend is moving to the cloud, although this is not new it provides easy access to scalable IT environment, supporting the anticipated increase in digital transformation in 2021. We are also likely to see increased polarisation in negotiations for major SaaS/cloud negotiations during 2021 as suppliers become more risk-averse under poor economic conditions and customers look to leverage SaaS/cloud technology for more and more critical business functions. 

Kuba Ruiz, Senior Counsel, Warsaw
Izabela Kowalczuk-Pakuła, Partner, Warsaw
Piotr Dynowski, Partner, Warsaw
Ian Edwards, Partner, London
Ben Hughes, Senior Associate, London

The increased migration to cloud will lead to a new generation of cloud models. A new trend in this area is Distributed Cloud, which consists of the distribution of public cloud services in different physical locations closer to the customer, while the cloud provider retains ownership, operation and responsibility of the service. This model may present significant advantages, both in terms of performance (latency) and local regulations compliance.

Pablo Berenguer, Counsel, Madrid

The new French IT Box tax regime offers significant reduction in French corporate income tax liability on licensing revenue linked to software. We have seen a noticeable uptake from companies developing Artificial Intelligence, benefitting from a 20 points reduction on their income tax rate (from 30% standard rate down to 10% reduced tax rate). France has been one of the last countries in Europe to introduce such tax reform, but the French regime is particularly  attractive as it can be combined with R&D tax credit (30% up to €100 million of R&D expenses, and 5% above €100 million) and an attractive 10% rate on the income generated. We anticipate more software companies taking advantage of these tax options in 2021. 

Laurence Clot, Partner, Paris

Customer profiling (KYC) is a crucial activity for any intermediary providing banking, financial or insurance services to the retail market. In the EU context, this activity is subject to a wide range of disciplines: Mifid II; IDD; PSD2; AML; ESG Regulation and GDPR.

In a digital market, profiling is increasingly carried out through Artificial Intelligence (AI) systems to optimize the use of personal and non-personal data sets and achieve economies of scale and scope. 

The adoption of the automated KYC process based on artificial intelligence opens up many regulatory and contractual issues that need to be addressed: 

(i) Customer Data Management - the collection and storage of personal and non-personal customer data; 
(ii) Artificial Intelligence Governance - concerning the interpretation of the AI model implemented in KYC processes;
(iii) Effective respect for customers' rights to receive "an explanation about the decisions taken after the algorithmic evaluation" (Article 11, GDPR).

Further Reading: ESMA Guidelines on MiFID II suitability requirements (May 2018)

IOSCO Consultation Report, “The use of artificial intelligence and machine learning by market intermediaries and asset managers” (June 2020)

Giuseppe D’Agostino, Of Counsel, Milan

As a result of the pandemic, the trend towards atypical working in the technology sector has accelerated and employment laws are likely to change to reflect the reality of increasingly flexible and agile working practices. Competition for talent remains as fierce as ever with many software companies having already adopted permanent or semi-permanent “work from home” or “work from anywhere” models in order to attract and retain key staff across the globe. As remote working becomes more routine, even for more traditional technology businesses, we can expect to see legal challenges and/or new regulation or policy with respect to: workplace health and safety (especially mental health and wellbeing), employee monitoring, performance management and reward, safeguarding of confidential information and monetary allowances and/or expenses for homeworkers. More generally, as business models evolve to reflect new ways of working, it is likely that there will be further legal protections introduced for the contingent workforce.    

Further reading: The Future of Remote Work – Overview of issues relating to remote working across countries

Ian Hunter, Partner, London 
Furat Ashraf, Associate, London 

The UK Supreme Court’s decision in Unwired Planet and the German Supreme Court’s decision in Sisvel v Haier have set off a chain reaction which will see hard fought FRAND litigation in China and India in 2021. As it becomes difficult in Europe for implementers to maintain the upper hand, the new defensive tactic is a combination of global FRAND rate determinations in China and anti-suit injunctions to thwart parallel overseas litigation. For SEP owners, India is becoming the venue of growing importance in 2021 given (a) a willingness to grant interim relief; (b) a willingness to protect the sovereignty of its own Courts through anti-anti-suit injunctions; and (c) the size of the market for many unlicensed implementers.  

Matthew Laight, Partner, Hong Kong
Christine Yiu, Partner, Hong Kong
Richard Vary, Partner, London

Technology Transfers

Technology has been at the heart of almost all deals, which have been put under a stronger spotlight in the context of the COVID-19 pandemic as well as the US-China trade tensions. To facilitate technology transactions, China’s effort on market-based reform has been observed in the past year in the promulgation of new laws and regulations, in particular, the new Foreign Investment Law and its implementing rules. In 2021 we expect China will continue to optimise its business environment and strengthen international exchanges and cooperation on technology transactions. However, businesses should be aware of upcoming stringent restrictions to certain categories of technology export under the new Export Control Law. 

Further Reading: Technology Transactions in China – Doing Deals in a Complex Legal Environment

Sven-Michael Werner, Partner, Shanghai
Tiantian Ke, Associate, Shanghai

PSD2 contains a requirement that, in principle, every time a payer initiates a payment (whether with his card or from his bank account), the payer’s payment service provider (PSP), for example his bank, should perform a two-factor authentication or strong customer authentication (SCA) of the payer, to make sure it’s really that individual, not a fraudster, who is trying to make that payment. In relation to online card payments, this requires important technical changes for merchants, banks, acquirers, etc. (something referred to as the implementation of the “3DSecure protocol”), and for that reason the deadline for compliance was postponed throughout the EU to 31 December 2020 (and until 14 September 2021 in the UK). Online merchants are extremely worried about this new SCA requirement which has the potential of significantly harming their conversion rates (i.e. proportion of people shopping on their website who actually manage to pay) and therefore their revenue, in particular in difficult economic times. Definitely a very important topic for online merchants in 2021.

Scott McInnes, Partner, Brussels 

Asia Data Risks

Data is an asset, and it can also be a liability. As data use proliferates, the risks arise from multiple sources. With increased regulatory enforcement action, rising public awareness of data rights and more decisions in favour of claimants, these risks have only increased. In Asia, the patchy data regulatory framework adds to the complexities. Most organisations are concerned first with regulatory enforcement action, but the risk of follow on civil claims by injured parties (whether based on legislation or contract) is equally real and could have a greater impact. When faced with a potential action, issues such as causation and the value of data should be closely examined as they can completely eliminate or substantially reduce liability. 

Further Reading: Singapore: Cyber and Data Breach Exposure  

Lijun Chui, Partner, Singapore

Cyber security

Cyber security, and data protection advice in connection therewith, is becoming increasingly important. We see an increasing need for companies to assess its policies, its security measures and cyber security insurances. All organizations must be prepared for a potential data breach, but especially for organizations handling vast amounts of personal data.

Mattias Lindberg, Partner, Stockholm

Data Driven Societies

In recent years there has been considerable emphasis on the importance of data for digital economies and there has indeed been lots of focus in the various industries on exploitation and commercialization of data. However, it seems the legal environment for the actual protection of (non-personal) data and its sharing has not developed much. It will be interesting to see how the European Commission will take its Strategy of Data further and, in particular, whether its plans for the Data Act (2021) will materialise.

Vojtech Chloupek, Partner, Prague

Data Localisation

With the Schrems II judgement, the CJEU has invalidated the Privacy Shield, a data export mechanism and restricted the use of the so-called Standard Contractual Clauses for transferring Personal Data from the European Economic Area. The Commission has tightened provisions in those clauses, which effectively amounts to a strong incentive for European companies to focus their processing in Europe. Companies will be well advised in 2021 to revise their data flows and choice of transfer mechanisms.

Tobias Bräutigam, Senior Counsel, Helsinki

Data Security & Data Protection

“Data is the new oil” in the world. In line with the global trend which attaches significant emphasis on data, China has released two of the highest national-level legislations, i.e. the Draft Data Security Law and the Draft Personal Information Protection Law, in July and October 2020 respectively. Once adopted, both laws, along with the effective 2017 Cyber Security Law, will serve as the so-called three-pillar regulatory framework governing data in China, touching upon every aspect of companies doing business in or with the Chinese market. It is imperative for businesses to stay ahead of the curve and be prepared for the significant change of the regulatory landscape in the near future.

Further Reading: China's long awaited draft Data Security Law released - What does it cover (and not cover)?

China Data Protection Update: The First Draft of The Long-Awaited PRC Personal Information Protection Law released

Sven-Michael Werner, Partner, Shanghai
Tiantian Ke, Associate, Shanghai

Digital Assets and Data in the EU

With an increasing focus by businesses on the commercialisation and re-use of data, regulators are starting to catch up and we are seeing increasing proposals for regulation in this area. With the European Union publishing its data strategy and its legislative action plan in support of the strategy and the UK running its own national data strategy consultation, we can expect to see more countries follow suit over the next 12 months to seek to attract data businesses and boost their economies by furthering data sharing by both the public and private sector. Keeping up with these developments will enable you to shape your data strategy in a compliant manner and build confidence in your business.

Stephanie Lopes, Senior Associate, London

Digital Tax

Tax authorities around the world are targeting digital companies to tax their revenues where their users are located. This has led to the unilateral introduction of a digital services tax (DST) by several countries including France, Spain, Italy and the UK, which will begin to collect tax revenues in 2021 following its introduction of a 2% DST, until governments can agree an appropriate international solution. The OECD has been hosting negotiations with governments worldwide to implement a reform of taxation for digital activities and consumer business companies but these have been hampered by the Trump administration withdrawing in June 2020 as well as by COVID-19. However, there is growing optimism that the incoming Biden administration will re-engage with the EU and the OECD on negotiations for a multilateral solution. Any OECD agreement is now expected in mid-2021 and may include an agreement on a global minimum tax rate. Both business and governments will wish to reach a solution sooner rather than later, if only to address escalating trade tensions with the US where countries face the renewed risk of US retaliatory import tariffs as a result of DST implementation.

Giuliana Polacco, Senior Counsel, Milan
Annarita De Carne, Associate, Milan
Simon Gough, Legal Director, London
Caroline Brown, Associate, London

eCommerce Import Tariffs

UK and EU ecommerce sellers will face greater import tariffs even if a UK-EU Free Trade Agreement is struck by 31 December 2020. There will be some relief for smaller packages under customs thresholds of £135 / €150, but sellers using major marketplaces will be at risk as they will be obliged by online platforms to clear their offshore stocks for customs purposes in advance of making sales in 2021, while tax authorities will need to address enforcement difficulties against offshore sellers and platforms. Online marketplaces themselves will also face a greater VAT compliance burden as they will become deemed sellers for VAT purposes in the UK and EU in 2021 for imported smaller packages sold via their platforms and for consumer sales of in-country stock by their overseas sellers. The UK is also querying whether VAT rules should change for the new “sharing economy” being facilitated by online digital platforms, including whether platforms should be responsible for VAT on supplies that underlying service providers will make to consumers. The sharing economy could potentially create certain challenges to global VAT revenues, at a time when revenues must be raised to address COVID-19 deficits.

Caroline Brown, Associate, London
Simon Gough, Legal Director, London

Diversity & Inclusion

With the growing focus on diversity and inclusion (D&I) in the workplace, this remains a priority for technology businesses worldwide and no boardroom agenda is complete without addressing the development of an effective D&I strategy. Employees are increasingly expecting companies to have a tangible and impactful approach to D&I that drives sustainable change within the workforce and goes beyond just policies and procedures. From a practical and legal perspective, diversity monitoring in the workplace continues to be a real challenge given the limitations on collecting and using such data, particularly for global organisations that are faced with differing (and in some case conflicting) legal and cultural norms across the world. This is something employers must battle head on if they are to develop tangible initiatives that cultivate an open and inclusive work environment that attracts diverse talent and creates long-term value for the business. 

Further information: HR Data Essentials – Equality, Diversity & Inclusion Comparative Chart, Diversity Monitoring Webinar Recording – delivering an effective equality, diversity and inclusivity strategy & Key Takeaways.

Bird & Bird’s Ethical Workplace & the Law in Practice webinar series.

Ian Hunter, Partner, London
Furat Ashraf, Associate, London

ESG: the path forward

Environmental, Social, and Corporate Governance (ESG) is not just environmental issues. It covers social issues (think labour practices, talent management and data security) and governance matters (think board diversity and business ethics). Shareholders and investors have been paying more attention. So have regulators who start first with increased disclosure requirements and who may follow through with regulatory enforcement action. ESG disclosures can also give rise to direct liability when they are found to be inaccurate, misleading or false. Given the spotlight on these issues, we should see more ESG initiatives and compliance.

Lijun Chui, Partner, Singapore

Open Source Software & Open Data

In 2021, one of the key challenges will continue to be the collaborative development of software and data pools. Software development has become increasingly collaborative for several years, starting from waterfall approaches to agile and on to (semi-) open source development. Open data-based projects are starting to follow suit. To collaborate, companies will need to reconsider their software stack and data pools, identifying relevant rights to the software or the data and they will need to review and revise their internal legal framework and procedures to enable participation in and benefitting from open source and open data projects.

Miriam Ballhausen, Counsel, Hamburg

Payments

Open banking, which allows third parties to access a customer’s bank account data, has led to the development of many novel applications which use this banking data (e.g. for creditworthiness assessments and account dashboards). However, another functionality permitted by open banking, the ability of a third party to initiate a payment on behalf of a customer (referred to as a payment initiation service), is not a feature which has seen such a strong uptake in the UK due to the prevalent use of credit and debit cards to make online payments. However, we expect that within the next year or so there are likely to be an increasing number of payment initiation services which are being utilised by merchants in the UK to allow customers to pay for their goods or services by way of a bank transfer. The success of open banking payment solutions is likely to hinge upon providing a solution that is attractive to merchants as compared with the costs of a traditional card transaction.

Gavin Punia, Associate, London
Tom Hepplewhite, Associate, London

Privacy Shield

On 16 July 2020, the EU Court of Justice adopted a long-awaited decision annulling the EU-US Privacy Shield and declared the validity of Standard Contractual Clauses (SCC) in the context of international data transfers under EU law. Consequently, the personal data of EU citizens can no longer be lawfully transferred to the USA relying on the EU-US Privacy Shield. The SCC remains valid but the Court emphasized that in order for the transfer of personal data outside the EU on the basis of SCC to be lawful, it is necessary to examine not only the content of the contract but also the conditions of personal data protection in the country or countries of destination. If the legal system in the country of destination prevents personal data from being adequately protected, it is not possible to transfer personal data to such a country even on the basis of contractual clauses. For controllers and processors of personal data, the decision means the need to review to which specific countries they transfer personal data and on the basis of which mechanisms. This can be particularly complex in supply chains, for example in relation to cloud services, where customers often do not have information on which countries the data is actually stored or processed. The judgement is available here.

Radomir Pivoda, Associate, Prague

Withholding Tax

The exploitation of digital rights requires the utmost attention on how contracts between companies located in different countries are stipulated including on arrangements regarding the entity bearing the burden of withholding tax. The application of reduced withholding tax based on tax treaties and meeting the relevant conditions, including the beneficial owner test must be reviewed. This is due to a rise in tax authorities around the world scrutinising contracts involving intangible assets, including digital rights, to check whether the withholding tax treatment has been correctly applied. Penalties may indeed be very high in cases of non-compliance.

Giuliana Polacco, Senior Counsel, Milan
Annarita De Carne, Associate, Milan

Regulation

COVID-19 Impact on online behaviour and technology usage

COVID-19 and the shift to a working from home model has tested broadband speeds and connectivity like never before. The ACCC Critical Services Report found that the service has held up well during 2020, while ACMA’s consumer survey on online behaviour and technology usage has found that while video conferencing services may have proliferated, fixed line service use has continued to fall. Ultimately this may provide challenges for NBN Co (the Government owned broadband network) given the potential threat of 5G fixed wireless and mobile substitution. The ever-increasing appetite for wireless broadband will also inform decisions by government regarding spectrum including re-farmed broadcast spectrum.

Thomas Jones, Partner, Sydney
Matthew Bovaird, Associate, Sydney
Dylan McGirr, Summer Clerk, Sydney

Database Directive

As part of its mission to achieve technological sovereignty in Europe, the EU is exploring ways to help companies capitalise on their intangible assets. The European Commission hopes to facilitate the sharing of and trading of machine-generated data, as well as Internet of Things related data. To this end, it plans to review the Database Directive in the third quarter of 2021. We can expect a robust discussion on how to update this (under-achieving) Directive in line with the development of artificial intelligence and boost the competitiveness of the EU database industry. 

Further reading: Commission adopts Action Plan on Intellectual Property to strengthen EU's economic resilience and recovery

Francine Cunningham, Senior Public Affairs Manager, Brussels

Data Governance Act

The European Commission introduced its proposal for the Data Governance Act in November 2020, putting the first block of legislation planned under the European Data Strategy into action. The Act aims to increase data sharing among businesses and re-use of data across sectors by boosting the development of trustworthy data sharing systems. The proposal creates rules to increase trust on service providers acting as data sharing intermediaries and seeks to foster voluntary data sharing of both individuals and companies.

Further Reading: The European Commission’s proposed Data Governance Act makes trust a cornerstone of data sharing

Tobias Bräutigam, Senior Counsel, Helsinki
Feyo Sickinghe, Of Counsel, The Hague

Data Protection in the Middle East

We anticipate the adoption in the Middle East of data protection laws across multiple jurisdictions. While some are expected to be aligned with the EU’s GDPR, such as Abu Dhabi Global Market’s Data Protection Regulations, other jurisdictions may introduce laws and regulations that pose challenges to multinational businesses operating in the region, particularly in relation to the cross-border transfer of data. We have also witnessed a rise in cyberattacks in the region as hackers take advantage of COVID-related digital adoption and remote working to threaten corporate networks. The UAE, for example, has seen a 250% increase in cyberattacks this year, with phishing and ransomware incidents increasing in frequency. Economic development and diversification will continue to play a key role across much of the Middle East, in particular within the GCC countries, which will in turn drive investment in physical and digital infrastructures to support these economies rapid digital transformation and build an attractive ecosystem for foreign investors.

Lena El Malak, Associate, Dubai

Digital Platforms Regulation

The Australian government has placed digital platforms under significant scrutiny in 2020 following the release of the Australian competition regulators landmark Digital Platforms Inquiry. This scrutiny is set to continue in 2021. The finishing touches are currently being put on the mandatory news media bargaining code. The Code seeks to address the perceived imbalance in bargaining power between Australian news media business and Facebook and Google by providing access to binding arbitration. A Bill is set to be tabled in Parliament before Christmas. In addition, the ACCC is looking at proposing behavioural remedies to address competition concerns arising out of Google’s proposed acquisition of Fitbit. Finally, the ACCC is in the midst of an inquiry into the Adtech supply chain. This inquiry was also flagged in the Digital Platforms Inquiry and will likely result in regulatory intervention directed at improving transparency.

Thomas Jones, Partner, Sydney
Matthew Bovaird, Associate, Sydney
Meggie Zhang, Paralegal, Sydney

Digital Services Act

With the momentum towards online platform regulation in full swing, we can expect robust negotiations on the proposed EU Digital Services Act (DSA) which is set to introduce substantial, new due diligence rules for intermediary services to tackle illegal content online. We can expect animated discussions between platforms and content providers over a "know-your-own-business customer" approach that would require platforms to do more to track and trace pirates and rogue operators. There will be sensitive discussions over fundamental rights, in view of the proposal for users to be given new powers to challenge the content moderation decisions of platforms. Heated debates around digital advertising can also be expected, with stringent transparency requirements proposed regarding the use of profiling and recommender systems.

Further reading: The Digital Services Act package

Francine Cunningham, Senior Public Affairs Manager, Brussels

EU Electronic Communications Code (EECC)

The EECC is designed to put in place one of the essential building blocks of the EU's Digital Single Market and marks a significant revision of the current EU telecommunications regulatory framework, dating from 2009. At the heart of the EECC is the desire to promote connectivity in fibre deployment as well as 5G. Accordingly, the EECC has measures to promote greater investment in very high capacity networks. This is in line with the EU's ambitions to achieve advanced connectivity (which chime with the UK's ambitions), and one of the EECC's core objectives reflects this ambition. The UK is obligated to implement the new EU telecoms rules as part of the Brexit transitional arrangement and the UK Government recently published legislation transposing the requirements of the EECC, with some notable deviations including the approach to number-independent interpersonal communication services. The Ofcom rules (GCs) set out the specific telecoms obligations as applicable to the various communication providers and Ofcom published its final statement on 27 October 2020 setting out the end-user requirements. The EECC comes [came] into force at the end of 2020, but the real test of its implementation in practice will happen in 2021 and beyond.

Further Reading: European Electronic Communications Code

The UK finalises its plans to implement the new European telecoms code

Anthony Rosen, Legal Director, London
Matt Buckwell, Associate, London

German Telecommunications developments

As we approach Germany’s next federal election in September, the legislative agenda for the Communications sector is overflowing. Projects to be completed during the current legislative term ending next summer are:

• transposition of the EECC with an act on the modernization of telecommunications legislation (see our newsletter of 30 November 2020),
• a new act on privacy in telecommunications and telemedia (TTDSG), aiming to modernize the ePrivacy-regulations and adapt them to the GDPR, while the long-overdue ePrivacy regulation remains stuck in the legislative process,
• a new IT-security law,
• new legislation concerning the disclosure of subscriber data to law enforcement agencies, after the German constitutional court held the current rules to be unconstitutional.

These legislative projects and related hearings, debates and lobbying activities will keep the debate on communications regulation in Germany abuzz over the first half of 2021.

The second half of 2021 will likely be filled with the federal election, its outcome (including who succeeds Angela Merkel who has announced that she won’t seek re-election), the formation of a new federal government and finding out what the new coalition’s agenda for the tech & comms sector will be.

Valerian Jenny, Senior Counsel, Frankfurt

Personal data localisation requirements

2021 will see the development of the enforcement practice for non-compliance with the personal data localisation requirements. Having significant monetary fines for such non-compliance is likely to encourage wider audits and online monitoring by the enforcement authority. The state may further introduce substantial fines for infringing the internet sovereignty requirements. The aim of such fines is to encourage an efficient national system of routing the internet traffic and procure stable operation of the local internet segment.

Anna Shashina, Partner, Russia desk

Telecoms Code

In 2021, the Telecoms Code will be implemented in the Netherlands, with new obligations for providers of associated facilities, number independent communications services, fibre and 5G roll out. It is expected that various stakeholders will lobby for additional rights and obligations on top of the Telecoms Code.

Feyo Sickinghe, Of Counsel, The Hague

Infrastructure

Belt, road and space

Many of the advances being made in terms of smart infrastructure, IoT and autonomous vehicles are reliant upon access to fast and reliable broadband connectivity with close to zero latency. Many of these applications will also be deployed in sparsely populated areas where fixed broadband connectivity is unavailable or prohibitively expensive. This makes satellite broadband an essential complement to the 5G ecosystem. In the past, access to the space capabilities required to achieve that lay in the hands of a few Western nations. In 2021, we anticipate the continued expansion of space activities by China and India, including plans by various Chinese companies for mega LEO constellations and the consummation of Bharti’s investment in OneWeb which has now emerged from Chapter 11. The race for space may have some new players but otherwise continues unabated.

Thomas Jones, Partner, Sydney
Matthew Bovaird, Associate, Sydney

Data Centre Tax Considerations

The COVID-19 crisis and the accelerated growth of digitalisation in new areas, e.g. digital health has highlighted the importance of Data Centers to many multinational organisations. However, setting up a Data Center may trigger multiple tax issues, from the acquisition of the relevant land, to the implementation of the business model, to the identification of the “arm’s length” revenues to be declared to local tax authorities. It is important to identify these tax issues in advance in order to mitigate the risk of an aggressive challenge by local tax authorities.

Giuliana Polacco, Senior Counsel, Milan
Annarita De Carne, Associate, Milan

5G

The commercial deployment of 5G technology represents a revolution that will not only affect mobile telecommunications but will also have a positive impact on other technologies such as IoT, AI, virtual reality or robotics, while also supporting the launch and consolidation of new services. The European Commission forecasts that deploying 5G in the health, transport and utilities sectors, will be worth €62.5 billion to the EU economy by 2025. However, this technology poses significant legal challenges, including security, privacy, infrastructure deployment, liability for communications failures, and patent licensing that will require a coordinated approach at European level.

Maria Fuentes, Associate, Madrid

Space & Satellites

Like other industries, the space industry has been disrupted by the events of 2020, however for both the EU and UK, there were a number of positive developments. At the end of 2020, the EU agreed a €14.8 billion budget for the next seven years for the EU Space Programme. We anticipate that this ambitious budget will present opportunities for both space and non-space companies in 2021 and beyond, right across the industry, from launch, Earth observation and commercial satellite activities. For the UK, 2020 was also an active year in many respects despite the toll the pandemic has taken on the space and satellite sectors. Some notable developments include the UK Government’s purchase of a $500 million stake in the satellite operator, OneWeb, and the steps taken to implementing licensing framework under the Space Industry Act 2018 for commercial spaceflight. We expect that 2021 will bring further progress in relation to the UK’s commercial spaceflight ambitions which will be of interest to satellite companies, launch service providers and the operators of UK spaceports.

Further Reading: One giant (regulatory) leap for UK spaceflight: the launch of the UK Government’s consultation on the supporting regulations to the Space Industry Act 2018

Nicholas Puschman, Associate, London