Magda Cocco
Vieira de Almeida, Lisbon
mpc@vda.pt

Rui Gordete Almeida
Vieira de Almeida, Lisbon
ral@vda.pt

Introduction

The information era has elevated submarine cables to prominence, they now constitute the backbone of global telecommunications infrastructure and data exchange. As the digital economy expands, the burden on existing infrastructure intensifies, thereby underlining the importance of promoting investment in new submarine cables to fulfil increasing requirements.

This effort is palpable in the EU and its Member States due to its focus on ensuring the EU’s global competitiveness on the digital front.

In this context, the Body of European Regulators for Electronic Communications (BEREC) has approved^[1] the ‘Draft BEREC Report on the general authorization and related frameworks for international submarine connectivity’ (the ‘report’). With this draft report, the BEREC aims to clarify the general authorisation and related frameworks applicable to international submarine connectivity and to identify possible solutions to promote investment in this sector and strengthen the EU’s geostrategic position.

Strategically positioned, Portugal emerges as a key node in this global network. In fact, within the EU, Portugal is among the nations actively developing a national strategy to promote investment in international submarine connectivity, leveraging its strategic geographic location as a hub for connecting submarine cables across continents and a vast maritime expanse of about 4.1 million kilometres squared.

Recognising Portugal's potential in the intricate matrix of global telecommunications, the Portuguese State has shown indications of its commitment to creating an investment-friendly regulatory landscape. In November 2023, the Portuguese government issued Dispatch no 11808/2023, of 22 November (the ‘Dispatch’), outlining actions aimed at simplifying the process of installing submarine cables and associated infrastructures, such as data centres.

This article spotlights the key facets of the regulatory environment governing the installation and operation of submarine electronic communications cables in Portugal. Investors need to navigate this landscape while investing in this industry, keeping one eye on the present and another on the future.

This will include considerations on Law no 16/2022, of 16 August (the ‘Electronic Communications Law’ or ECL, which transposes the Directive (EU) 2018/1972 of the European Parliament and of the Council, of 11 December 2018, establishing the European Electronic Communications Code, the EECC), on Decree-Law no 123/2009, of 21 May, or DL 123/2009, governing the installation, exploration and access to physical infrastructures suitable to accommodate electronic communications network (transposing Directive 2014/61/EU of the European Parliament and of the Council, of 15 May 2014, commonly known as the ‘Broadband Cost Reduction Directive’ or BCRD), such as submarine cable related infrastructures, and on the upcoming Gigabit Infrastructure Act (GIA).

‘Draft BEREC Report on the general authorization and related frameworks for international submarine connectivity’

The ‘Draft BEREC Report on the general authorization and related frameworks for international submarine connectivity’ is a document that aims to clarify some regulatory aspects of deploying and operating submarine cable systems in the EU. It was approved by the Board of Regulators on 7 December 2023 and stood open for public consultation until 31 January 2024. The report covers four main topics: the submarine cable systems value chain and ownership trends, the applicability of the electronic communications regulatory framework to submarine cable systems, the related authorisation administrative procedures in various matters and the European and national measures to promote international submarine connectivity. 

The report describes the activities involved in the submarine cable systems value chain, such as survey, supply, installation and maintenance, and the ownership and operation models, which have shifted from traditional electronic communications networks and service providers (ECN and ECS respectively) to content and application providers. It also discusses the business and technological trends in the sector, namely the emergence of open submarine cables and landing stations and the increasing cable capacities. 

The report outlines the definitions and scope of application of the ECL. It explains the general authorisation regime, which allows the provision of ECN or ECS without prior approval, only requiring prior notification, and imposes rights and obligations for providers of electronic communications networks and services. It also examines the criteria for qualifying submarine cable systems as public or non-public ECN or ECS, and the experience of national regulatory authorities in applying the framework to submarine cable systems. 

The report identifies other national authorisation administrative procedures required for deploying submarine cable systems, such as environmental protection, cultural heritage protection, maritime resources planning and management, and urban and territory planning and management. It provides an overview of the duration and complexity of these procedures in different countries, as well as the challenges and best practices for simplifying them. 

The report gathers information on the initiatives at the European and national levels to promote international submarine connectivity, such as the EU Global Gateway, the Connecting Europe Facility, the European Data Gateways Declaration and various legal, institutional, security and financial measures. It also highlights the strategic importance of submarine cable systems for the EU's geostrategic position and digital sovereignty. 

It cites Portugal as an example of a country actively developing a strategy to simplify the installation process of submarine cables and associated infrastructures.

Creating an investment-friendly regulatory environment: Dispatch no 11808/2023, of 22 November, and the Potential National Interest (PIN) Project Statute

In November 2023, the Portuguese government issued Dispatch no 11808/2023, of 22 November, which outlines actions to simplify the process of installing submarine cables and associated infrastructures, such as data centres. These actions are not focused on the electronic communications regulatory framework only, but instead consider the submarine cable industry from a 360-degree perspective.

The Dispatch assigns responsibilities to various public entities to, among others, develop a specific submarine cable licensing regime and create an informative guide for submarine cable investors. It also requests the National Communications Authority (ANACOM) to propose legislation for technical and regulatory conditions for submarine cable burial through the Horizontal Directional Drilling (HDD) methodology, provide information to potential investors on physical infrastructures suitable to hold electronic communications networks (pursuant to DL 123/2009), define expedited mechanisms for electronic communications network infrastructure in high-demand locations and establish technical security requirements for submarine cable infrastructure.

Moreover, the Dispatch requests the Energy Services Regulatory Authority (ERSE) to propose legislation for public service concessionaires regarding infrastructure expansion and fibre optic network installation and the Portuguese Investment and Foreign Trade Agency (AICEP) to develop and implement a communication plan promoting Portugal for submarine cable and data centre investments.

It is worth noting that this Dispatch does not set forth any specific regulatory measures, per se, but prescribes the abovementioned authorities to take certain actions towards promoting investment. As the Dispatch sets implementation deadlines ranging from three to nine months for the various actions, developments are expected soon.

Investors in submarine cable projects in Portugal should be aware that the Potential National Interest (PIN) regime is already available to them. By requesting recognition of the submarine cable project as an investment project with the status of Potential National Interest (PIN), investors can ensure close monitoring by the Permanent Commission for Investor Support (CPAI) of all licensing, authorisations or approvals necessary for project implementation, overcoming potential administrative blockages and ensuring a quick response.

To be eligible for PIN status, the project must meet a set of cumulative eligibility requirements, including representing a total investment of €25 million or more, creating 50 or more direct jobs, being environmentally and territorially sustainable, and having a positive impact in at least three of several designated areas. It is important to note that recognition as PIN does not confer any additional rights, and all applicable legal and regulatory rules remain valid. However, it will allow the application of the special regime established in Decree-Law no 154/2013, of 5 November (as last amended in 2017), and it does provide priority treatment in licensing procedures with any entities, bodies or services of the public administration. The PIN regime may also apply to investment projects with an overall value of less than €25 million and/or that create less than 50 direct jobs, provided that they meet certain requirements.

The current regulatory framework of the general authorisation regime, Decree-Law no 123/2009 and the upcoming Gigabit Infrastructure Act

While, as shown, the Portuguese government is taking action to incentivise investment in the submarine cable industry in Portugal through the adaptation of the applicable regulatory framework, the current electronic communications regulatory framework already shows some pro-investment characteristics.

Indeed, the general authorisation regime, an integral component of the EU's legal landscape for ECN or ECS is the front door to access the Portuguese telecoms market. Under this regime, investors can provide ECN and ECS without previous approval from ANACOM – only a prior notification is required. In the case of private ECN or non-publicly available ECS, prior notification is not required.

Furthermore, investors can, in certain circumstances, request rights-of-way and use of the public domain to set up facilities. This is a crucial tool if the investment plans do not entirely rely on already-deployed networks and infrastructure and are further regulated in DL 123/2009. This legal instrument transposed the Broadband Cost Reduction Directive into Portuguese law while providing additional regulations (indeed, some of the obligations outlined in the upcoming Gigabit Infrastructure Act are already reflected in Portuguese law).

The BCRD establishes minimum rights and obligations for network operators and public authorities to ensure the efficient use of existing infrastructures, the coordination of civil works, the simplification of permit-granting procedures and the provision of in-building physical infrastructure.

However, after an ex-post evaluation, the BCRD was assessed to be only partially effective and efficient in achieving its objectives and not to fully reflect the increased need for very high-capacity fixed and mobile connectivity, as well as the technological and market developments in the electronic communications sector.

In that context, the European Commission has proposed a new regulation to replace the BCRD, namely the Gigabit Infrastructure Act (GIA). This act aims to revise and strengthen the measures to reduce the cost of deploying gigabit electronic communications networks. The GIA sets updated targets for 2030 to meet future connectivity needs, such as ensuring that all households have access to internet speeds above 100 megabits per second and that 80 per cent of households have access to internet speeds above one gigabit per second.

The GIA introduces changes and improvements to the current legal framework that could further contribute to an investment-friendly regulatory environment, such as harmonising across the EU the rules and procedures for granting access to existing physical infrastructures, including the conditions, terms and prices of access, as well as the dispute settlement mechanisms, and enhancing the transparency and availability of information on existing and planned physical infrastructures, by requiring network operators and public authorities to provide and update such information in a single information point at the national level, and by enabling the European Commission to establish a common European information platform.

The GIA, when adopted, will have a direct and binding effect on all Member States, without the need for transposition into national law, and will repeal the BCRD and, consequently, DL 123/2009. The GIA will also ensure a higher level of harmonisation and legal certainty across the EU and a more consistent and effective implementation of the measures to reduce the cost of deploying gigabit electronic communications networks.

The GIA, on which the European Parliament and the European Council reached an agreement in February, must be formally adopted by both bodies. The new rules will be applicable in all EU Member States 18 months after they enter into force, with specific provisions applying slightly later.

In conclusion

In sum, the surge in global data traffic and the urgent need for secure and resilient telecommunication infrastructures have rightfully brought submarine cable investments to the forefront of attention. Portugal's strategic geographic position and broad maritime territory make it a key player in the submarine cable industry, connecting continents and facilitating information exchange.

The current approach taken by the Portuguese government and regulatory bodies highlights their awareness of this potential, as demonstrated in Dispatch no 11808/2023 and their commitment to facilitating the installation and operation of submarine cables. While some investment-friendly measures are already in place, such as facilitating access to previously deployed physical infrastructures, there is still room for improvement.

As the ongoing work on the proposal for the GIA at the EU level continues, considerable efforts are expected to be made towards creating an investment-friendly regulatory environment, both at the EU and national levels. The outcome of the BEREC consultation on the BEREC draft report is also eagerly anticipated, as its findings could further promote development in this area.

In the meantime, public authorities at the national level are expected to fulfil the actions prescribed by Dispatch no 11808/2023, as they seek to promote investment and pave the way for an even brighter future in the world of submarine cables.