As Brexit uncertainty persists, the future of UK telecoms regulation (as with much else!) remains in limbo. Looking ahead, even if a withdrawal agreement is signed, we merely move into a transition period while we attempt to negotiate a future relationship with the EU. In terms of how that future relationship would look, we have little guidance from Prime Minister Boris Johnson as to how he sees that relationship applying as regards to telecoms. Below we identify a number of issues that any future relationship will need to consider and what a no-deal Brexit in telecoms would look like.
1. Roaming, intra-EU texts and cross-border portability
Currently and during the transition period, the Roaming Regulation will continue to apply. In a no-deal scenario or if this is not negotiated as part of the future relationship, that Regulation will cease to have effect and, as the UK Government has itself acknowledged, the costs charged to UK operators by other EU mobile operators for the provision of roaming services would no longer be subject to the Roaming Regulation. Similarly, UK operators would no longer be subject to the provisions that govern what they can charge at the retail level, leaving the price of roaming services at the discretion of UK mobile operators. While all four large operators have said they have no current plans to move away from the present roaming tariffs, this is only a voluntary commitment and is not time bound in any way.
Either in a no-deal scenario or in a future scenario in which roaming is not included as part of the future relationship, operators are unlikely to want to face a consumer backlash if roaming costs go up. This means they may have to find other creative ways to offset increased costs.
The intra-EU text and SMS cap for consumers came into force on 15 May 2019 and, again, in a no-deal scenario, or if this is not part of the future relationship, UK operators would no longer be subject to this cap. Given the short time this cap has been in place in a no-deal scenario and the relative lack of visibility for most consumers (in contrast with roaming), it is difficult to see operators not taking the opportunity to increase charges above the cap levels once they are free to do so in that scenario. If there is a transition period, customers will have had longer to have the benefit of that cap and so operators may find it harder to move away from if that is not included in a future relationship.
Similarly, the cross-border portability regulation will also cease to apply in a no-deal scenario or if not included in the future relationship. Consumers who have grown used to accessing their Netflix, Amazon Prime or Now TV services whilst temporarily abroad could find that they are again faced with the dreaded words "this content is not available" unless they have decided to buy a "travel package". Of course, providers of online content may decide to retain the status quo. Again, however, this depends on a voluntary decision by them as to whether it is in their overall interests to do so.
2. Reduced mobility of labour/skills shortages
Current UK Government targets are for full fibre broadband for 10 million premises by 2022, 15 million by 2025, and an aspiration for nationwide coverage by 2033. The Prime Minister Boris Johnson has described these targets as "laughably unambitious". He has suggested that he would like to reset the target to nationwide full fibre coverage by 2025. Achieving this target would require the deployment of fibre to around 5 million premises a year till that date. To achieve this rollout, operators have written to the PM suggesting they need four things: reform of the fibre tax, reformed wayleave provisions, compulsory full fibre broadband for new builds and access to skilled labour. Operators have said they need access to compete for global talent to bring in engineering and digital skills. The proposed £36,000-a-year cap for talent put forward by the Home Secretary Priti Patel, alongside an end to the free movement of people, means that the industry is likely to be severely resource constrained either in a no-deal Brexit scenario or in a number of variations of the future relationship (see comment below on derogations from ECC & EC Rules).
3. Import of telecoms equipment
Prior to 31 March, Openreach had announced that it was stockpiling equipment in case of a hard Brexit. No doubt, other operators had also been stockpiling ahead of a 31 October deadline. The UK is a net importer of telecoms equipment, and operators face not only stockpiling issues in order to ensure their equipment is not caught in transit delays but also currency fluctuations that will impact the price of equipment given the ongoing uncertainty around the outcomes. Given the UK's ambitions for full fibre rollout and deployment of 5G, how equipment importation is dealt with in any future relationship is important if the impact on these objectives is not to be negative.
4. Operations of UK-based global carriers in the rest of the EU and globally
In the event of no deal or no specific provisions in any future relationship on telecoms, carriers with cross-border services, especially those serving multinational customers, will look to rely on establishments or offices in other EU states to allow them to take advantage of the benefits of the free movement of services. Similarly, they are likely to look to contract out of these non-UK based entities to be able to benefit from EU procurement rules.
5. Wider changes to telecoms law
Recent policy pronouncements from the UK Government in the form of the Statement of Strategic Priorities and the recent consultation on implementation of the Electronic Communications Code (ECC) suggest that many of the policy initiatives pursued in the ECC are aligned with those of the UK Government on telecoms (which is not unexpected given the substantial UK input into the creation of the ECC).
If there is a withdrawal agreement and a transition, the UK will be required to implement the ECC. Given that the current version of the withdrawal agreement foresees the possibility that the transition could be extended beyond December 2020, these provisions will not only be in force but will be being adopted in practice. It is therefore hard to see that the UK would substantially row back on these no matter what the outcome of the future relationship around telecoms. Even if we do crash out without a deal we would expect to see that the UK would continue to adopt many of the changes in the ECC in a no-deal scenario.
At the same time, however, we would expect that a Boris Johnson government might seek to introduce greater flexibility around fibre deployment and regulation in order to drive it forward. Importantly this may include some more fundamental changes in terms of the Government's position on state aid in the telecoms sector. While Theresa May's government had indicated that they would not look to move away from the EC position on state aid and competition, Boris Johnson's desire for a rapid rollout of broadband infrastructure may see a move away from this position. His removal of the provisions of alignment and level playing field from the withdrawal agreement also suggests that he sees a more flexible state aid regime as a key part of any future relationship.
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