European Union: Communications Networks – Update On UK And EU Regulatory Reviews

In March, Ofcom announced its decision to undertake a strategic review of the telecommunications sector, having not carried out such a review since 2005. In parallel, the EU is currently reviewing regulation within the industry.

The Ofcom review On 16 July 2015, Ofcom published a discussion document on its strategic review of digital communications and identified four main policy objectives, as follows:

  • Investment and innovation, delivering widespread availability of services – providing the right incentives for private sector investment
  • Sustainable competition, delivering choice, quality and affordable prices – regulation that protects both competition and incentives for efficient investment
  • Empowered consumers, able to take advantage of competitive markets
  • Targeted regulation where necessary, deregulation elsewhere.

The EU review The EU review, which is part of the European Commission's Digital Single Market (DSM) strategy, will focus on the following areas:

  • A consistent single market approach to spectrum policy and management
  • Delivering the conditions for a true single market by tackling regulatory fragmentation to allow economies of scale for efficient network operators and service providers, alongside effective protection of consumers
  • Ensuring a level playing field for market players and consistent application of the rules
  • Incentivising investment in high-speed broadband networks (including a review of the Universal Service Directive)
  • A more effective regulatory institutional framework.

A summary of developments on key areas under review is set out below.

Encouraging investment in networks Both Ofcom and the EU Commission recognise the need for a regulatory regime that supports investment in network technology, reflecting the economic benefits of modern widely available communications infrastructure and the increasing demands on network resources. Striking the right balance between encouraging this investment and facilitating competition through regulated wholesale access (as well as protecting consumers) is crucial and will be the cause of much debate within the industry as proposals for reform are considered.

Ofcom has invited comments on its approach to price regulation for access services. To date, Ofcom's approach has been to allow operators to recover their efficiently incurred costs for regulated access but has given investors more latitude on the recovery of costs for high-risk investments in new technologies. Ofcom notes possible options as price regulation based on risk-adjusted rates of return, shared investment models where risks and costs are shared among downstream partners and lighter touch regulation on new investments.

The EU DSM document also recognises the challenge for regulators in achieving the right balance between wholesale access regulation to promote competition and creating the right regime to encourage network investment. It notes that investment incentives may be reduced if regulated wholesale access is made disproportionately attractive.

Regulating coverage As well as supporting commercial investment in networks, Ofcom has signalled its intent to regulate to ensure the provision of services in areas not adequately supported by commercial investment. As part of its Autumn Infrastructure Report, Ofcom will outline its proposals in respect of raising the minimum fixed broadband speed, as well as the extension of the universal service obligation applicable to BT and Kingston Communications to 5Mbit/s.

Competition at a network operator level While Ofcom does not itself make decisions on the approval of mergers in the sector, the relevant competition authorities will certainly take account of its comments. Ofcom has underlined its belief that consumers are best served, in terms of quality of services and pricing, by a market with reasonable competition. Ofcom ran the 4G auction to ensure that the market consisted of at least four mobile operators providing wholesale access to other service providers. Ofcom has not accepted the argument that less competition at a network level (Hutchison's takeover of O2 would reduce the number of mobile operators in the UK from four to three) would encourage network investment and has cited examples where such consolidation in other countries has led to price increases. It remains to be seen whether Ofcom's concerns about the proposed deals can be addressed.

Ofcom has raised the possibility that such consolidation may necessitate new regulation in relation to wholesale mobile access for mobile virtual network operators (MVNOs). The UK has a very competitive MVNO market, but Ofcom notes that consolidation at a network operator level may affect the commercial incentives for operators to properly support MVNOs. In the meantime, MVNOs will no doubt be reviewing the terms of their MVNO contracts (particularly in relation to quality of service, access to new technologies and pricing reviews).

Wholesale fixed access – BT Openreach Providers such as Sky and TalkTalk have been calling for the separation of BT's Openreach wholesale arm. Although Ofcom considers that its approach to the regulation of BT over the last 10 years has delivered many benefits to consumers and businesses, it recognises the need to safeguard against any potential discrimination by Openreach against BT's retail competitors, and to ensure the provision of a good quality of service. Ofcom has outlined four potential options for future action:

  • Continue with the current approach
  • Strengthen the current model of functional separation
  • Consider structural separation – Ofcom notes that this would be a challenging option
  • Substantial deregulation and greater reliance on end-to-end competition

Network sharing Ofcom has underlined its support of network sharing arrangements in light of the potential for cost savings and improved coverage. The EU notes different approaches by national regulators on spectrum sharing as a challenge to delivering potential benefits to sharing arrangements.

OTT communications services As over-the-top (OTT) services have grown, many have been calling for greater regulation of OTT providers. Operators argue that OTT providers are competing with them for revenue but do not bear any of the costs of operating a network. Ofcom has signalled its intent to review the case for applying a degree of regulation to OTT providers who provide competing services to operators, so as to deliver the same quality outcomes to consumers.

Net neutrality A related issue is the extent to which operators may want to explore different charging structures for bandwidth-hungry applications.

Ofcom has not passed any specific net-neutrality regulation (i.e., regulation that provides for open access to all content and services to an equal service level) and has instead focused on the need for communication providers and ISPs to be transparent about restrictions that apply to customers in accessing content or applications. Operators and ISPs have also signed up to a voluntary code of practice prohibiting blocking.

However, the EU has been seeking to regulate this area for some time. On 30 June, it announced agreement of the EU Parliament, Council and Commission to new rules that would be implemented as part of the DSM reform. The rules will prohibit any blocking, throttling, degradation or discrimination of internet traffic by internet service providers, unless required to:

  • Comply with law (e.g., in relation to illegal content)
  • Preserve the security and integrity of the network (e.g., to prevent misuse of a network and combat viruses)
  • Minimise network congestion that is temporary or exceptional

The rules will also limit the extent to which ISPs can offer bespoke enhanced service levels to content/service providers. Enhanced service levels can only be offered where sufficient capacity would remain for general internet access. Furthermore, ISPs may not charge this enhanced service as an alternative to general internet access and such enhancement must be provided as a service in addition to the basic access service.

As ever, the operation of these new rules will depend on the drafting of the legislation. Previous attempts at drafting prescriptive rules on the circumstances when ISPs can offer enhanced service levels were widely criticised.

Deregulation Ofcom identifies a number of possible opportunities for deregulation including:

  • Reduced need for regulation to deliver access-based competition where end-to-end competition can be protected or promoted
  • Reduced need for regulation to deliver access-based competition arising from convergence
  • Accurate focus of access-based competition on a specific bottleneck allowing for deregulation of downstream services
  • Effective competition in specific geographic markets allowing for deregulation e.g., leased lines in parts of London

Even where large scale deregulation is not practical, Ofcom wants to consider the scope for removing individual regulations that are no longer required, for example simplification of the General Conditions.

Pay TV BT has recently called for the Ofcom review to cover pay TV. Ofcom has ruled this out but will consider access to content as part of its consideration of the effect that bundling has on competition. It will also consider how easy it is for consumers to switch between different pay TV and bundle providers.

Next steps Ofcom invites responses to the issues raised in the discussion document. These must be sent by 5pm on 8 October 2015 and Ofcom intends to publish emerging views at the end of 2015.

The European Commission will present its proposals for regulatory reform in early 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions