The telecommunications sector has seen enormous growth over the past 20 years, driven by the twin demands for mobile telephony and internet access. While this growth has been global in nature, Europe has been at the forefront of many market developments. EU telecommunications policy has been pursuing market liberalisation and harmonisation since 1988, beginning with the opening up of the telecommunications equipment market. Europe has experienced notable successes over the years, such as third-generation mobile, and the emergence of global players, such as Nokia and Ericsson. However, in terms of regulatory implications, there are a number of reasons to be optimistic that Brexit may have less impact than in other sector of business.
One key area in which the EU has been particularly successful is in exporting its regulatory framework for telecommunications, most notably with the World Trade Organization’s ‘Basic Agreement’ on telecommunications, to which some 100 countries have since adhered, representing over 90% of global revenues in the sector. One of the unique components of the ‘Basic Agreement’ is a ‘Reference Paper’ on regulatory principles for the telecommunications sector, which has been described as EU law ‘writ large’. Indeed, this is one reason why UK telecommunications law post-exit from the EU is highly likely to look and feel very similar to our current regime.
A second reason for relative regulatory stability is the fact that the telecommunications sector, in stark contrast to other related sectors, specifically broadcasting (known as ‘audiovisual media services’) and OTT services (known as ‘information society services’), has not been subject to the ‘country of origin’ approach to harmonisation. Under the ‘country of origin’ principle, a business established in one Member State is free to supply services into the other 27 Member States without further authorisation or regulatory control from the recipient state; except in limited and procedurally controlled circumstances. A significant advantage in a market comprising 28 countries. For telecommunications, this principle has never been adopted, with operators having to be authorised and to comply with national conditions in each and every Member State in which it has networks or into which it provides services. As such, operators continue to think and act on a distinctly national basis, subject to oversight and intervention by regulatory authorities, such as Ofcom, who have significant freedom to govern the market. Indeed, this is something on which operators have complained vigorously about for many years! The reasons for the current approach are too numerous to examine, but one element is the fact that in most Member States, the incumbent national operator (e.g. France Telecom and Deutsche Telekom) continue to be part owned by the state. Were the EU, post the UK’s exit, to finally move towards a truly Single Market for telecommunications, then the position of UK plc would be disadvantaged, but until then, operators are likely to experience little change.
A third reason for expecting little change is because key areas of the telecommunications sector have been retained under national control, rather than handed over to the EU. With respect to wireless communication services (e.g. mobile and satellite), control and management of spectrum has remained the exclusive (and valuable) property of the state. While usage requires co-ordination and co-operation, this occurs at an international, i.e. the International Telecommunications Union, as well as at a European level. With regard to wire-based systems and services, rights and obligations concerning the building of networks invokes issues of property and planning law, at both a local and national level. Social policies, such as facilitating rural broadband development and guaranteeing a minimum broadband universal service remain issues for the Member States to determine and deliver.
On the negative side, there are some key areas of telecommunications regulation that will, or may, differ following the UK’s departure. First, the European Commission will no longer have exclusive competence to decide on competition matters that have a ‘community dimension’, which led to their recent decisions over merger activity in the telecoms sector in the UK, although Ofcom will want to establish an effective working relationship to ensure that such matters are dealt with in a co-ordinated manner, as it would were any transaction to involve the US competition authorities. Second, the removal of ‘roaming’ charges from consumers within the EU from June 2017 may be disapplied to UK users, leading to higher prices when we roam into Europe. Third, the recent ‘net neutrality’ measures, and indeed any broader reform of the EU telecommunications market, may offer potential long-term advantages to operators within the EU to the extent that they level the regulatory playing field with OTT providers and reduce barriers to market entry.