Ofcom has recently published the Terms of Reference for its Strategic Review of Digital Communications. The Review aims to ensure digital communications markets continue to work for consumers and businesses and will focus on issues relating to infrastructure and competition.

The Review will focus on three areas: efficient investment, competition and deregulation. It will look at how incentives for efficient investment and effective competition drive good outcomes, mainly in terms of coverage, choice, price and quality of service.

The primary focus of the Review will be on infrastructure but it will also assess how services are offered over digital communications infrastructure, both fixed and wireless networks and also the internet.

In comments reported by Telecom Finance, Richard Eccles, partner in Bird & Bird's Competition Law Group, anticipates:

"Convergence of fixed and mobile technologies will be at the heart of the review, against a background of increasing broadband speeds and increasing use of mobile broadband... Ofcom will no doubt consider whether or how competition policy may be adapted and what its priority areas should be, for example in relation to converged operators and bundled offers, as well as looking at how efficient investment in communications infrastructure can be encouraged".

Investment

The Terms of Reference note that the UK is at an important stage for network investment. The framework for superfast broadband has been established the debate around driving competition and investment in ultrafast broadband is developing. In addition operators are undertaking further investments to improve the quality of 4G mobile voice and data services while the debate around 5G develops.

The Review will look at how incentives for efficient private sector investment and innovation can be maintained and strengthened to ensure wide spared availability and high quality services.

Competition

The Terms of Reference note several trends. These include:

  • the way in which convergence is driving new business models, network architectures and merger activity.
  • the growing use of bundled services.
  • the increased use wireless technology by end user devices.
  • the increased use of fibre to provide network capacity.

Convergence between fixed and mobile technologies and networks is also anticipated.

The Review is likely to consider whether interventions are needed to promote continuing competition and, if so, where.

Deregulation

The Terms of Reference identify a number of alternative or 'over the top' services such as voice, video and messaging services delivered by internet businesses and note that most of the UK's fixed network operators now plan to emulate these businesses by delivering service over their broadband networks and eventually switching off their traditional voice networks (while undertaking targeted investment in new networks where the economics work).

The Review is likely to consider the scope for deregulation of such services downstream and the role of competition in delivering good consumer outcomes.

Ofcom is expected to set out its initial engagement approach shortly. This process will seek views on a range of areas including:

  • end user demand and use of communications services.
  • the business models and strategies of communications service providers.
  • existing outcomes in terms of wholesale and retail services; network availability and investment incentives.
  • new technologies and network convergence.
  • existing regulatory remedies to competition concerns.
  • the scope for deregulation or new approaches to regulation.

The Terms of Reference envisage a consultation phase leading to a public discussion document on issues of regulation and deregulation in the summer of 2015, and publication of initial conclusions by the end of 2015.