BEREC report on enabling M2M and IoT: Affecting the M2M value chain

United Kingdom

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

On 1 October, the Body of European Regulators for Electronic Communications (BEREC) issued its draft report, which examines how the Internet of Things (IoT) and Machine-to-Machine Communication (M2M) services can best thrive. All providers in the M2M value chain should be aware of the proposals made by BEREC as they have the potential to affect (positively and negatively, depending on the role that provider plays) how M2M services will be provided and M2M business models in the future.

Regulating for M2M

To date M2M is regulated through existing horizontal regulation covering a myriad of non-specific M2M issues such as numbering, data privacy, security etc. Whilst BEREC does not seem to suggest introducing vertical legislation they raise a number of specific areas where existing regulation could (and should) be modified so as to accommodate the way in which M2M works. 

While deliberately not defining “M2M”, BEREC instead refers to key players in the M2M value chain when considering regulatory intervention – connectivity service providers, M2M service providers and M2M users and end-users are all considered.

Will M2M players find themselves regulated as telcos?

Currently many M2M players do not classify themselves as "electronic communications providers" under EU telecoms regulation. BEREC acknowledges that because there are already so many different types of M2M services in the market and because these are evolving so quickly, National Regulatory Authorities (NRAs) should be clearer on the application of telecom regulatory rules. Specifically there should be clearer definition of whether an entity qualifies as a provider of an electronic communications services because of the way in which it provides the services. If NRAs agree with such an approach, entities that currently fall into the grey area or have deliberately structured themselves so as to sit outside regulation will need to be particularly mindful. Falling into the electronic communications regulatory regime brings with it its own set of compliance obligations and costs.

What is BEREC suggesting? New regulations intended to help M2M services to thrive

In BEREC’s view, there are a number of preconditions for M2M services to thrive and all of these need to be considered with a view to regulating (through adapting existing rules rather than creating new ones) if market dynamics are hindering M2M growth and innovation. 

These pre –conditions include:

  • Adequate spectrum and numbering resources for M2M services;
  • Consumer acceptance of M2M services, which in turn involves getting issues such as transparency, privacy and data security right;  
  • Interoperability of services, devices and platforms; and
  • Open standards.
From a communications provider perspective there are two additional proposals to be aware of:
  • The first relates to roaming, already an emotive issue for many telcos across Europe. As M2M is different to traditional communication services focused around larger and larger amounts of voice and data, M2M requires smaller amounts of connectivity but does require permanent roaming.  As current EU regulation was not set up with permanent roaming in mind BEREC suggests that this should be remedied for M2M, particularly if this technology is to succeed on a mass scale in the future.
  • The second relates to portability and the lack of an “easy solution” to enable M2M customers to change providers. BEREC suggests mirroring number portability obligations for M2M services, something that the telecom industry will be cautious of implementing. 

Although BEREC does not have the power to set law itself, NRAs and the European Commission have to take utmost account of any opinion, recommendation, guidelines, advice or regulatory best practice it adopts. All of BEREC’s changes lean towards adaption of the existing EU regulatory telecommunications Framework to make it fit for M2M services. No-one in the M2M ecosystem should be complacent about the proposed changes; these are the types of changes that can make or break a business plan.

BEREC has asked consultation for comments by 6 November. The report and its tenants will be looked at in more detail and presented on at the third BEREC stakeholder meeting on 15 October.