12 October, 2021

ETNO POSITION PAPER on the Consumer Credit Directive

ETNO welcomes the European Commission’s initiative in proposing a Consumer Credit Directive, repealing and updating the current Directive (2008), and bringing consumer protection law with regard to credit agreements up to date, as part of the New Deal for Consumers.

What credit agreements do our members offer?

Our members provide consumer credit agreements, most notably in the form of equipment provided to customers in order for them to avail of services (network access) to which they have subscribed.  Such credit agreements may exceed the amount of 200 EUR, and the payment is typically done in multiple installments (which can extend to 24 or 48 months) interest free.

Why are such agreements necessary?

1. Access to purchased (and essential) services. In order to be able to avail of services purchased (i.e. Internet / mobile subscription), terminal equipment or Wi-Fi routers are required. If a consumer does not have the means to purchase such equipment on a one-off payment, credit agreement where payment is made by installments not only provides lower-income consumers with access to communication services, but indeed with access to essential services such as emergency communications.
2. Narrowing the digital divide. Affordable and accessible access to communication services, especially Internet access, is essential for consumers today, including for interacting with public administration. Credit agreements offered by telcos can contribute to narrowing the digital divide. These advantages include:
   1. No need for a third party: merchants are able to offer such credit formulas themselves, without going through an intermediary in the banking sector, thereby reducing administrative burden for all parties involved.
   2. Simplicity: since such credit agreements can be offered and accepted simply by the in-store or online subscription and registration process, there is an absence of constraints in terms of communication.
   3. Low risk of over-indebtedness: the Commission’s intention of expanding the scope of the Directive to reduce the risk of over-indebtedness of households is an important consideration. It must be borne in mind, however, that the risk of such credit agreements offered by telcos contributing to household over-indebtedness is extremely low. Not only is the amount involved low and the timescale (24-48 months) short, but there is minimal-to-no interest charged, and the payment is made in the form of a mobile / Internet bill, which is generally accounted for as part of a household’s normal expenses.
3. Stimulating investment. As 5G auctions conclude, the EU is seeing the ever wider roll-out of 5G across the territory. Packages offering 5G connectivity services, bundled with a 5G-ready device, make 5G accessible to a considerably wider proportion of the population, boosting the demand and stimulating investment into 5G infrastructure and services.

Read the full document at the link below.