Tech
nology &
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vation

Recent developments

National coverage with NGA technologies in Romania remains significantly lower than in other EU member states and is still very much limited to urban areas. Only 38.6% of rural households had access to NGA networks in 2017, which is significantly below the target of 100% coverage with 30 Mbps by 2020.

In 2018, the Romanian Government initiated a new project (EUR 63.7 million financed from ERDF and the state budget) for the coverage of white areas with broadband networks allowing internet access of over 30 Mbps. This project aims to develop the quality of internet service within 3223 localities.

On 25 May 2018, the General Data Protection Regulation (GDPR) became applicable. The GDPR was followed by rules aimed at implementing so-called “open clauses” in Romania and various decisions adopted by the National Authority for the Supervision of Personal Data Processing. In parallel, the discussions for completing the proposed e-Privacy Regulation continued at EU level. These legislative changes have a significant impact on all companies carrying out activities in Romania, including in the ITC sector. Companies have needed to gradually adapt their products and services, as well as their internal processes, to ensure compliance with data protection requirements. The authorities have provided only limited support for these efforts, while the amount of information and data available on how the authorities apply the data protection norms is limited. 

When aligning local legislation to the e-IDAS Regulation, both the public authorities and the business environment embarked in a roller coaster journey during 2017-2018. The Ministry of Communications submitted three versions of the draft law for public consultation, each with a different approach. In parallel, another draft law on electronic signatures was initiated by Parliament.

 

In 2017, the Ministry of Internal Affairs published draft legislation on electronic IDs for consultation with the aim of issuing the first electronic ID by mid-2018. However, the draft has not yet passed Parliament. eIDs could be used by citizens for authentication and signing in relations with public and private institutions, if they include an authorised signature. So, they represent important tools for Romania’s digitalisation.

Romania has made progress on smart city initiatives mostly on the West Region, Alba county.

During the last few days of 2018, the Romanian Government adopted Emergency Ordinance (EO) no. 114/2018, without consulting the business community and the industries affected and without an impact study. EO 114/2018 had a significant impact on the telecommunications sector and on the entire economy.

 

  • The currently applicable European Union regulatory framework - Article 12 of Directive 2002/20/EU, as well as the new regulatory framework - Article 16 of EECC - clearly stipulate the purpose of the monitoring fee that may be levied by regulators in the EU Member States. According to this legislation, the monitoring fee should only cover the administrative costs incurred by the regulator. The increase of the monitoring fee from 0,4% to 3% of turnover is unjustified and illegal, and will become a burden for the entire industry as well as for fixed and mobile users. For mobile operators, the tax will increase the already high contribution paid for spectrum resources – approx. 4.5% of total annual revenue, the second highest in Europe after Italy (5%). It will strongly affect the development of communication networks and services by decreasing operators’ investment capacity. Telecom operators have constantly, significantly and successfully invested in the development of better services and of the digital environment.

  • The section related to the spectrum lacks clarity and leaves space for interpretations. The reserve prices foreseen for the 5G spectrum tender, as well as those for spectrum extension, are extremely high, have no justification and no real connection to the value of the spectrum, in direct contradiction with EU legislation (EU Directive 2002/20). These prices will exhaust the financial resources of the mobile communications sector, to the detriment of the investments needed to support network development, at a decisive moment in the process of aiming to achieve the national and EU 5G targets, as stipulated in the 5G Strategy of Romania and Connectivity for a Competitive Digital Single Market - Towards a European Gigabit Society documents. Thus, at a time when the rest of Europe's operators will be investing in 5G in order to enable industrial automation and smart city projects, Romania will fall behind and will fail to achieve its national priorities (also mentioned in the context of the country’s Presidency of the Council of the European Union) including the digitalisation of the economy and public administration.

  • The electronic communications sector is discriminated against compared to other industries due to the lack of proportion between the scale of the social harm caused by the offences related to telecommunications infrastructure works, as set out in art.85 of GEO 114/2018, and the high level of the penalties (Section 2.3). The Ordinance will impede the investments needed for the building and maintenance of the high-speed internet infrastructure as the excessive fines have also been set in the context of an extremely complicated and difficult bureaucratic regime for building permits.

  • As a consequence, the objectives of the Digital Agenda for Europe, as well as the implementation of the “Action Plan: 5G for Europe” could fail.

Areas for improvement

Broadband penetration and coverage

The penetration of broadband services continues to be a key challenge in Romania, despite the progress registered in the last few years. Although Romania ranks among the first countries in Europe for ultrafast broadband penetration (at least 100Mbps), the national coverage with NGA technologies remains significantly lower than in other EU member states and is still very much limited to urban areas. 

Only 38.6% of rural households had access to NGA networks in 2017, which is significantly below the target of 100% coverage with 30 Mbps by 2020, set through the National Plan for the Development of the NGN Infrastructure. Penetration of fixed internet broadband covered only 22.5% of the population in June 2017, much lower than the EU average. (Romania came in the last but one place in the EU). Moreover, in the European Commission’s Communication – Connectivity for a Competitive Digital Single Market - Towards a European Gigabit Society, new ambitious targets were set in relation to broadband penetration and coverage. Building on the Digital Agenda for Europe 2020 targets, all European households, rural or urban, should have access to networks offering a download speed of at least 100 Mbps, which can be upgraded to 1 Gigabit. Moreover, all urban areas as well as major roads and railways should have uninterrupted 5G wireless broadband coverage, starting with fully-fledged commercial service in at least one major city in each EU Member State by 2020.

FIC recommendations

Even though mobile broadband is a service that covers the entire population of Romania (advanced 3G or 4G), it cannot be considered a full substitute for fixed services. 5G technology will start to be deployed by Romanian operators after the spectrum tender to be organised at the end of 2019. This will increase the access of customers and companies to very high-quality broadband services. The development of 5G networks will involve roll out of fiber optic connections and installation of new telephone masts.

FIC recommendations

FIC recommendations

Taking into account the objectives undertaken through the EU Digital Agenda updated recently by the European Commission, broadband penetration and coverage should be treated as a key priority within government strategies. The development of fixed broadband networks, as well as of 5G networks should be supported by the Romanian authorities, who should take firm steps to achieve the following:

  • Simplification of the building permits regime, in order to speed up the process and decrease the costs borne by operators: a separate section dedicated to telecom should be included in Law no. 50/1991.

  • Decrease of the prices for access to infrastructure and to metropolitan ducts, in order to incentivise development of NGA networks and 5G mobile networks: to do this, ANCOM should publish the calculation model for access to infrastructure.

  • Decrease of the annual tariffs for spectrum usage, to help the deployment of modern technologies.

  • The inclusion in ANCOM’s spectrum strategy and spectrum licenses of technology neutral coverage obligations;

The FIC also believes that access of users to high quality broadband services can be ensured via correct regulation of the wholesale markets corresponding to the retail broadband market.

Access to European funds

Many EU member states have made extensive use of European Investment and Structural Funds to extend broadband connectivity. In these cases, the administrative capacity to maximise the leverage effect on public (national or regional) and private co-funding (notably through the use of financial instruments) has been critical to support projects rolling out the next generation of broadband networks.

So far, Romania has allocated European Funds to deploy fixed broadband infrastructure in 783 white areas from a total of 2,268 via the RoNet project. The project has been delayed and it is expected to be finalised this year. In 2018, the Romanian Government initiated a new project for the coverage of white areas with broadband networks allowing internet access of over 30 Mbps, with a total value of 63,7 million euros (from the ERDF and state budget). This project aims to enrich the quality of internet service within 3223 localities.

FIC recommendations

FIC recommendations

The FIC recommends that the Romanian Government should accelerate European funds projects for the development of fiber infrastructure, which are especially needed in the context of the new imminent 5G technology.

The FIC suggests the Romanian authorities should offer operators a higher degree of predictability and a longer period for the analysis and submission of projects.

We also consider it important that the Romanian Government should start preparing for future projects that will be funded by the European Union in the next multiannual financing framework 2021-2027, first of all by identifying, together with the industry, the priorities of the electronic communications sector and the areas that need to be supported from public funds.

Simplification of the authorisation regime for the deployment of communications networks

A simplified authorisation regime should be created for the deployment of communications networks, as a derogation from the general regime.

Current legislation (Law No. 50/1991) is not beneficial to Romania achieving the objectives undertaken through the Digital Agenda. Small steps have been made to help the deployment of electronic communications networks. Under Law No. 159/2016 on the regime for electronic communications networks infrastructure and on measures to reduce the cost of deploying electronic communications networks (“Law 159”), Law No. 50/1991 was amended to allow upgrades to be carried out without a building permit.

FIC recommendations

FIC recommendations

FIC members firmly support the reform of the authorisation regime and they propose the creation of a regime allowing derogations from the general authorisation regime for the deployment of electronic communications networks. We strongly recommend that the Ministry of Development should involve all relevant stakeholders that can provide useful input into this process.

FIC members express their availability to provide support, by actively participating in working groups and in proposing solutions that will represent the basis for the authorisation regime for the deployment of electronic communications networks. We consider that transparency is required in dialogue with the relevant industry and feedback from all relevant stakeholders is key in the process of reforming the authorisation regime. 

Transparency on data analytics and on implementing data protection rules

The digital society is undergoing major changes. As more and more of our day-to-day activities go electronic and digital, very large volumes of data about us become available. This phenomenon is being compounded by both technological and behavioural factors (e.g.: increased use of online services such as e-commerce, e-government, social media, etc).

Today, many firms are building their business models around their use of this data, especially for advertising, personalised offers and real time customer interactions. This use can also generate services that will benefit both individuals and society in general.

In this context, a user centric privacy framework must be based on a correct understanding of the user’s privacy interests. There is a need to provide a consistent user privacy experience that will establish familiarity with the privacy implications of applications and services, empowering the user and leading to better privacy management.

FIC recommendations

When human activity is outsourced to technology based on algorithms, there will always be a fear of loss of autonomy. As from 25 May 2018, the General Data Protection Regulation (GDPR) became applicable. The GDPR revised and supplemented the general rules on data protection, as introduced at EU level in 1995 (via the Data Protection Directive 95/46/EC) and at Romanian level via Law No. 677/2001. The GDPR was followed by rules aimed at implementing so-called “open clauses” in Romania (via Law No. 190/2018) and various decisions adopted by the National Authority for the Supervision of Personal Data Processing, such as the decision on its investigative activity and the list of activities for which a data protection impact assessment is needed.

In parallel, the discussions for completing the proposed ePrivacy Regulation continued. Similarly, with the GDPR, the ePrivacy Regulation aims to review and update data protection rules in the electronic communications field, irrespective if it is a free or paid for service and including all traditional and modern forms of communication. In May 2018 the European Council published its own draft of the proposed ePrivacy Regulation. Further to this action, the European Parliament will enter into tripartite negotiations with the European Council and the European Commission, in order to agree on a finalized text that can be adopted by the European Parliament.

FIC recommendations

These legislative changes have a significant impact on all companies carrying out activities in Romania, including in the ITC sector. Companies have needed to gradually adapt their products and services, as well as their internal processes, to ensure compliance with data protection requirements. The authorities have provided only limited support for these efforts, while the amount of information and data available on how the authorities apply the data protection norms is limited. 

The practice of the National Authority for the Supervision of Personal Data Processing is not transparent and repeated changes in approach are not publicised. This may lead to practical roadblocks in the promotion of new types of services, as companies are unsure how to ensure compliance with data protection requirements. 

FIC recommendations

FIC recommendations

Faced with the rapid development of digital uses and growing threats (viruses, spam, etc.), simple tools need to be put in place to help users to cope with, manage and control their personal data and how it is used. 

The National Authority for the Supervision of Personal Data Processing should ensure transparent and predictable implementation of the legislation on data protection. Adoption of guidelines should lead to the required increase in transparency. 

Government and ICT players should also commit on the following four areas:

  • Security of customers’ personal data through its reliable processing and secure storage.

  • Control for customers over their own personal data and how it is used (e.g.: “opt-in”,” opt-out”). 

  • Transparency in terms of the handling of the data at any time and informed consent. 

  • Support for all customers and users to help them protect their privacy and manage their personal data better. 

  • To ensure that the implementation of legislation on data protection will not negatively affect ICT players, they should be able to participate actively in the consultation process prior to the National Authority for the Supervision of Personal Data Processing adopting any GDPR implementation rules.

  • The Romanian Government should actively participate in the discussions related to the completion of the proposed ePrivacy Regulation, as this legislation will represent a significant change of focus to the rules governing digital services. To define the priorities for its participation, the Government should hold thorough consultations with the industry and other relevant actors. 

Trust services

The Electronic Identification and Trust Services Regulation (eIDAS Regulation 910/2014/EC) seeks to enhance trust in electronic transactions by providing a common foundation for secure electronic interaction between citizens, businesses and public authorities, thereby increasing the effectiveness of public and private online services, electronic business and electronic commerce in the EU.

The Regulation lays down the conditions for the recognition of notified electronic identification schemes of Member States, the rules for trust services, especially those for electronic transactions and establishes a legal framework for electronic signatures, seals and stamps.

FIC recommendations

It became applicable for trust services on 1 July 2016 and finally provided a consistent legal framework for cross-border acceptance of electronic identities and signatures. It is directly applicable in all EU Member States, and does not need to be transposed into member states’ national laws. As an exception, the liability regime for trust services providers and legal effects of standard and advanced electronic signatures must be defined at national level, as the Regulation does not govern their validity and the evidential weight in court. Qualified electronic signatures are, by Regulation, equivalents to handwritten signatures and have equivalent legal effects.

The internal market principle provides that a qualified trust service based on a qualified certificate issued in one Member State will be recognised as a qualified trust service in all other Member States. Products and trust services that comply with the Regulation need to be permitted to circulate freely in the internal market.

FIC recommendations

At national level, in 2017 two draft laws for the establishment of a series of measures for the enforcement of the e-IDAS Rule, repealing Law 455/2001 on electronic signatures, were submitted by the Ministry of Communications and the Information Society (MCSI) in September and mid-December for public debate, each with a different approach. The FIC has also joined discussions and organised various meetings with relevant stakeholders, including with the MCSI.

In February 2018, the MCSI released a third draft of the law on electronic signatures, but there has been no progress on its approval since then. Parliament, in turn, has launched a second draft which is currently under public consultation.

FIC recommendations

In parallel, another draft law on electronic signatures was initiated in Parliament, with the IT and Communications Commission of the Chamber of Deputies taking the lead on public consultations at experts’ level.

Consequently, both the public authorities and businesses have embarked on a roller coaster journey to align local electronic signature legislation to the e-IDAS rule.

The main points of discussion and dispute have been related to express recognition of legal effects for all three types of electronic signatures, differentiated according to the level of trust and security, to remote or technology-based identification procedures allowed for the acquisition of qualified electronic signatures and clarification of full recognition of digital certificates issued by qualified trust services providers from other EU countries.

FIC recommendations

FIC recommendations

In order to build trust in electronic transactions, which is key to economic and social development, relevant national law-makers, either from the Government or from Parliament need to speed the consultation and approval process for the draft legislation on electronic signatures, for the benefit of consumers, businesses and public authorities.

The benefits and convenience offered by digital services (the digital economy) need also to be facilitated by our national authorities’ adoption of an approach which is open to innovation. Innovation may reside in new authentication and identification technologies and procedures which use responsible security procedures and trustworthy systems.

Awareness needs to be created at all levels (among consumers, businesses and authorities) on the use, validity and benefits of electronic signatures and documents.

Implementation of trust services may trigger various challenges both for public authorities and for courts in which such electronic documents may be challenged. This which might result in serious impediments to the establishment of legal certainty on the usage of electronic signatures.

Romanian E-commerce within the digital single market

The Digital Single Market (DSM), a flagship policy undertaken by the European Commission (EC), seeks to eliminate current barriers and fragmentation within the single market, build a better online service for consumers and businesses, increase trust and boost cross-border e-commerce. The EC expects the DSM to contribute EUR 415 billion to Europe's economy, along with creating new jobs and remodelling public services. Working within the Digital Agenda for Europe 2020 targets, Romania has set ambitious goals through its 2020 Digital Agenda National Strategy, i.e. at least 30% of citizens to make online purchases by 2020 and at least 5% of citizens to make online cross-border purchases. At the same time, the strategy plans that at least 20% of SMEs will carry out transactions in the electronic environment by the same date.

FIC recommendations

In fact, Romania has proved to be competitive and has great potential in terms of e-commerce development at national level. However, data released in 2018 by Eurostat show that only 23% of Romanian internet users shopped online during the previous year, placing the country last when compared to all the other EU member states, while the EU online shopping average is 68%. The Digital Economy and Society Index (DESI) 2018 Country Report shows a minor rise in e-commerce turnover for SMEs (+5.2% - Romania ranked 25th), but also a small decrease in selling online cross-border (1.8%) where the country ranks last. (The EU average is 8.4%). The report also states that the Romanian authorities have yet to present a policy on promoting e-commerce that includes shopping online and provide a clear delineation of the applicable laws and how they are enforced.

FIC recommendations

In order to reach the targets already set and support SMEs in gaining better access for customers and businesses both at national level and across Europe, Romania should create the right conditions and a level playing field for the digital economy to flourish. This will necessitate full alignment of national legislation to all key changes proposed at EU level, especially considering that such a synergy with current legislative proposals would have a direct effect in improving and boosting e-commerce.

FIC recommendations

FIC recommendations

The authorities should take steps towards the swift passing of a business & customer oriented national policy framework on promoting e-commerce. This should support them in reaching the three main objectives set out in Field of Action 3 – eCommerce, Research & Development and Innovation in ICT within Romania’s National Strategy on the Digital Agenda 2020:

  • Supporting eCommerce to achieve economic growth and development in the European digital single market

  • Increasing the number of jobs in the ICT sector

  • Building on the comparative advantages of Romania’s regions

The working groups currently set up at government level to implement new legislation related to the e-commerce sector should amend outdated regulations (e.g. GO 99/2000) that hinder SMEs’ online development at national or cross-border levels. In addition, they should ensure that national legislation is up-to-date and fully aligned with EU regulations, aiming to promote customer trust through better protection and enforcement, as well as to remove barriers and eliminate fragmentation.

Electronic identity

In March 2017, the Ministry of Internal Affairs published on its website draft legislation on electronic IDs and according to public declarations, the intention was that the first electronic ID would be issued by mid-2018.

The draft provides for an optional, not a mandatory e-ID, that would incorporate an advanced certificate for electronic signature to be issued by the Ministry of Internal Affairs and would also allow storage of a qualified certificate for electronic signature issued by a trust services provider.

The advanced electronic signature issued by the Government would be used for authentication and signing in relation to the Ministry of Internal Affairs and other public or private institutions and it is planned that this would be the equivalent of a handwritten signature in relations with public institutions.

FIC recommendations

This means of authentication and identification could allow citizens to also benefit from a large range of private electronic services, including banking, insurance, telecom services etc.

e-IDs would also “open the door” to Romanian citizens also to authenticate themselves in other EU Member States, if they are notified to the European Commission and accepted by them, as the Romanian national electronic identification scheme. Mutually recognised electronic identification means would facilitate cross-border provision of numerous services and enable businesses also to operate on a cross-border basis without facing many obstacles they currently encounter in interactions with public authorities.

FIC recommendations

The FIC has been actively interested in and concerned for the success of this extremely valuable initiative and has supported its accelerated approval in Parliament, as well as the development of an enhanced version, leading to the wide use of e-IDs instead of the simple, classic identity card. Position and support papers were drafted and presented to the relevant Committees in Parliament.

Since February 2018, no progress has been registered with regard to e-IDs.

FIC recommendations

FIC recommendations

The legislative process on the issuance and usage of e-IDs should be resumed and the draft law should be approved by the end of the year.

A working group should be established to discuss the extremely important issue of secondary legislation.

Requirements and standards for the advanced certificate to be issued by the Minister of Internal Affairs should be in line with European standards, so it can be recognized under e-IDAS, and in alignment with any MCSI technical standards, as appropriate.

Awareness and education campaigns should be supported by the industries affected, to highlight the important benefits of e-IDs and to encourage an increase in the speed of e-ID adoption

Further legislation should be developed to promote digital IDs, and SIM-based mobile identity to the relevant Romanian authorities.

Smart City initiatives

Over the last decade, the development of information technologies, sensors, big data and products/services based on information has changed the way people live in cities. Access to information, services and communication is now provided anywhere and anytime by smartphones and people have adapted to this new way of living. This has created an urban environment with a growing demand for efficiency and resources. As a result, public administrations need to consider the development of the management models of cities.

The main challenge the public sector faces in responding to the opportunities a “smart city” brings is to quantify the impact of disruptive technologies. This can lead to challenging investment decisions. The structure and culture of city councils can impede strategic thinking on ICT and the required organisational changes can be hard to implement.

FIC recommendations

In Romania, the county with the highest number of smart city projects implemented by 2018 was Alba (82 projects) followed by Hunedoara (23) and Timis (21), according to the Romanian Association for Smart cities.

The success story of Alba is based on the strategic thinking of local authorities and also on the call for projects from the Ministry of Communications to celebrate the 100th anniversary of Romania, for which more than 20 private partners developed a large-scale smart city project in Alba Iulia.

Among the solutions introduced in Alba, the following stand out: free Wi-Fi in public areas and public transport, traffic management, an environment monitoring dashboard with comparative measurements in urban and suburban areas, real time notifications on the public transport schedule, smart lighting, and a city proximity engagement platform promoting tourism, water management in remote areas, as well as online surveys.

FIC recommendations

FIC recommendations

Local authorities will need to set up the necessary regulatory framework and related legislation on acquisitions, as well as choosing the right financing model.

At national level a smart city guide should be developed that can be adjusted and replicated among local authorities.

The smart city guide should include an open data system which allows data collection and processing from various vendors in order to be shared with stakeholders (citizens, as well as private and public institutions).