Market spotlight

Trends and developments

What is the current state of the telecoms market in your jurisdiction, including any trends and recent developments/deals?

The UK telecoms market has seen a continued rise in ‘quadplay’ offerings, which are combinations of broadband, telephone, mobile and television services offered by communications providers in a single bundle to consumers. This is epitomised by BT's successful acquisition of EE in 2016, which merged the United Kingdom’s largest fixed telecoms provider with its largest mobile operator. The merger has enabled BT to provide quadplay services on a comprehensive scale, further emphasising the growing desire of communications providers to integrate their services as a means of establishing a ‘sticky’ (ie, loyal) customer base and increasing overall revenue.

In contrast, the European Commission blocked the proposed acquisition by CK Hutchison (the parent company of Three) of O2 UK from the Spanish-owned Telefónica. The merger between O2 and Three would have resulted in the creation of the United Kingdom’s largest mobile operator, but was vetoed by EU regulators, primarily on the grounds that it would restrict customer choice and ultimately result in higher prices for consumers.

Lastly, the forecasted growth of applications relating to the Internet of Things continues to rise, as have steps towards the development of 5G, with an express commitment from the UK government to invest more than £1 billion in new fibre networks and 5G services over the next few years.

Regulatory framework


What is the primary legislation governing the telecoms market in your jurisdiction?

The primary legislation governing the telecoms market in the United Kingdom is the Communications Act 2003, which came into force on July 25 2003 (largely replacing the Telecommunications Act 1984), along with the accompanying General Conditions of Entitlement (established from the Communications Act). The act implements the following EU directives:

  • the EU Framework Directive (2002/21/EC) on a common regulatory framework for electronic communications networks and services;
  • the EU Authorisation Directive (2002/20/EC) on the authorisation of electronic communications networks and services;
  • the EU Access Directive (2002/19/EC) on access to and interconnection of electronic networks and associated facilities; and
  • the EU Universal Service Directive (2002/22/EC) on universal service and user rights.


Are any regulatory reforms or initiatives envisaged?

The Digital Economy Act received royal assent in April 2017. Among other significant changes, the act introduces a new Electronic Communications Code, which sets out the rights for network providers to construct electronic communications networks. The new code updates the existing code set out in Schedule 2 of the Telecommunications Act (as amended by Schedule 3 of the Communications Act). The UK regulator, the Office of Communications (Ofcom), intends to publish a final statement together with the revised conditions following its review of the General Conditions of Entitlement, which concluded in March 2017.

In addition, Ofcom began a consultation with industry stakeholders in August 2016 to “produce a coherent set of [General Conditions of Entitlement] which are clearer and more practical, easier to comply with and simpler to enforce”. This consultation was split into two parts; the first dealt with network functioning and numbering, whereas the second related to consumer protection. Ofcom is due to publish a final statement on this consultation shortly.

Universal service obligations

What universal services obligations apply?

The Communications Act 2003 implements the EU Universal Service Directive. As such, the same universal service obligations which are applicable across Europe also apply in the United Kingdom. Notably, the Digital Economy Act 2017 allowed for the creation of a new universal service obligation for broadband, whereby every household and business can request a broadband connection of at least 10 megabytes per second. There is an ongoing consultation regarding the final specification of this universal service obligation, which BT have volunteered to fund (involving an investment of between £450 million and £600 million).


Which authorities regulate the telecoms sector and what is the extent of their powers?

Ofcom is the main telecoms regulatory body in the United Kingdom. The Competition and Markets Authority also has the power to enforce competition regulation within the telecoms sector.

When Ofcom – acting reasonably – identifies a breach, it will notify the relevant communications provider and require it to take necessary steps to rectify the breach. Failure to comply with the initial notice may lead to Ofcom issuing an enforcement notice and, if the terms of the enforcement notice are not complied with, Ofcom may instigate civil proceedings and levy a fine. In the most serious of cases, Ofcom may suspend or restrict a communications provider’s entitlement to provide a regulated communications service and require compensation to be paid to the communications provider’s customers. Breach of a direction is a criminal offence, although communications providers in receipt of a notice or direction must be given the opportunity to make representations in their defence.

Ofcom has the power to issue enforcement notices to stop the persistent misuse of a network or service. It may also require entities to provide certain information relating to its regulation or networks and services.

Foreign ownership


Are there any restrictions on foreign ownership or investment in the domestic telecoms market?

There are no requirements for communications providers to be domiciled in the UK before or during the provision of services and there are no foreign ownership restrictions. In some cases, the secretary of state can intervene to prevent the transfer of control over a licence to a radio communications spectrum – such as that used by mobile operators – due to national security concerns, but this is highly unusual.

Licensing and authorisation

Licences/authorisations required

What licences/authorisations are required to provide telecoms services?

Communications providers have general authorisation to operate in the United Kingdom and do not require a licence, permit or consent for most communications services. The general authorisation framework derives from the EU Authorisation Directive (2002/20/EC). However, unlike other EU member states, the United Kingdom does not require the Office of Communications (Ofcom) to be notified before the provision of a communications service.

That said, licences are required for the use of a radio communications spectrum under the Wireless Telegraphy Act 2006, whereby mobile operators and other users of the spectrum require a licence from Ofcom to install certain mobile network equipment.


What are the eligibility, documentary and procedural requirements to obtain a licence/authorisation?

For general authorisation, communications providers need to comply only with the General Conditions of Entitlement under the Communications Act 2003. In respect of a spectrum, users participate in spectrum auctions or allocation mechanisms as conducted by Ofcom. Alternatively, they can seek to obtain a spectrum transfer from a party that has been granted a spectrum by Ofcom. However, this depends on the nature of the spectrum concerned and other limitations may apply.

Validity period and renewal

What is the validity period for licences/authorisations and what are the terms of renewal?

The validity period for a spectrum licence is subject to the licence terms, whereas general authorisation is unlimited.


What fees apply?

A mobile operator must pay a licence fee when granted a licence to install mobile equipment under the terms of the Wireless Telegraphy Act. All service providers with relevant turnover in excess of a set threshold (at present, at least £5 million) must also pay an administrative charge, which is set at around 0.0989% of turnover.


What is the usual timeframe for obtaining a licence/authorisation?

No timeframe applies for general authorisation, as this right applies automatically.

Where authorisation or a licence is required, no set timeframes exist. For spectrum licence auctions, operators must submit their bids within the parameters of the auction process.

Network access and interconnection


What rules, requirements and procedures govern network-to-network access and interconnection?

The General Conditions of Entitlement under the Communications Act 2003 require all providers of public electronic communications networks – irrespective of ownership – to negotiate interconnection with other providers of public electronic communication networks with a view to reaching an agreement within a reasonable time.


Are access/interconnection prices subject to regulation?

Prices are regulated by the Office of Communications (Ofcom) following a designation of one or more operators as having significant market power. Significant market power conditions can regulate wholesale rates for interconnection or for the termination of phone calls from other networks or their customers. All operators are required to provide call termination on fair and reasonable terms, conditions and charges.


How are access/interconnection disputes resolved?

The Communications (Access to Infrastructure) Regulations 2016 permit the reference of disputes arising out of infrastructure requests to Ofcom. The regulations further define the extent of Ofcom’s powers when dealing with a dispute. Communications providers may appeal against Ofcom’s final determinations to the Competition Appeal Tribunal, the grounds of which are set out in the Communications Access to Infrastructure Regulations, together with the procedure to be followed for such proceedings.

Other interconnection disputes can be resolved by Ofcom using its legal powers.

Next-generation access

Have any regulations or initiatives been introduced or proposed with respect to next-generation access?

In a bid to develop interconnectivity, the European Commission adopted a set of initiatives and legislative proposals as part of its digital market strategy. The connectivity package consists of a number of proposals including an action plan to deploy 5G within EU member states. It remains to be seen whether such initiatives will be adopted following the United Kingdom’s withdrawal from the European Union.

BT has also set up a functionally separate group, Openreach, which provides access services on equal and non-discriminatory terms. Openreach offers various superfast broadband and fibre products.

Infrastructure access

Land access

What rules and procedures govern telecoms operators’ access to land (both public and private) to install, maintain and repair infrastructure?

The Office of Communications (Ofcom) grants access rights under the Electronic Communications Code. The Digital Economy Act makes significant changes to the existing code. Among other things, the new code requires that, before a landowner is required to provide access to its land to a communications provider, the court must determine that:

  • the prejudice caused to the relevant landowner by the order is capable of being adequately compensated by money; and
  • the public benefit likely to result from the making of the order outweighs the prejudice to the relevant landowner.

Although the new code is set out in Schedule 1 of the Digital Economy Act 2017, the UK secretary of state needs to determine when it will come into force.

Infrastructure sharing

Are infrastructure sharing agreements among operators popular and/or encouraged by the regulatory authorities? Which infrastructure sharing structures/agreements are commonly used? Do any regulations apply?

Ofcom continues to encourage infrastructure sharing among communications providers and in April 2017 set out detailed plans for the improvement of access to BT's infrastructure. The plans facilitate greater competition by allowing providers to build fibre networks directly to individual homes and offices through the use of Openreach's existing telegraph poles and ducts.

In addition, the Communications (Access to Infrastructure) Regulations 2016 provide measures to reduce the cost of deploying high-speed electronic communications networks. These measures include the sharing of the physical infrastructure of network providers and infrastructure operators in other sectors.

On the mobile side, Vodafone and O2 have set up a joint venture called Cornerstone Telecommunications Infrastructure Limited, which manages their passive assets, and Three and BT/EE have a joint venture called Mobile Broadband Network Limited. Both ventures required regulatory sign-off.

Pricing and consumer protection

Retail pricing

What rules govern retail pricing for telecoms services?

Roaming charges are regulated on an EU-wide basis by the EU Roaming Regulation (531/2012/EC) (as amended by EU Regulation 2015/2120). Since June 2017 roaming providers are no longer permitted to levy a surcharge against roaming customers which exceed the corresponding domestic retail price (subject to a ‘fair use’ cap in order to prevent abusive or anomalous usage of the roaming services by roaming customers).

Communications providers that provide premium rate phone services must comply with the Code of Practice as governed by the Phone-paid Services Authority, which regulates premium rate goods and services. Further pricing regulation in respect of non-geographic numbers is set out in the General Conditions of Entitlement under the Communications Act 2003.

No other retail price controls apply, other than for low-income consumers.

Consumer contracts

What rules govern consumer service contracts?

A number of provisions in the General Conditions of Entitlement apply, including:

  • the requirement to include certain minimum terms in consumer contracts;
  • conditions relating to term and termination;
  • the requirement to make certain information available to the customer, such as a description of the services offered and the standard tariffs;
  • the availability of number portability; and
  • restrictions on sales and marketing activities.

In addition to specific telecoms regulations and codes, provisions of general consumer law also apply, such as rules concerning unfair consumer terms (eg, under the Consumer Rights Act 2015).

Disclosure requirements

Are telecoms service providers bound by any consumer disclosure requirements?

The relevant disclosure requirements are set out in the General Conditions of Entitlement, as per some of the conditions listed above.


Issues and concerns

Are there any particular competition issues or concerns in the domestic telecoms market?

The unsuccessful merger of O2 and Three emphasised a commitment by the competition authorities to maintain and promote competitiveness within the mobile telecoms sector. The European Commission's main concern with this merger was its potential impact on consumer choice and price escalation.

Sector-specific regulation

Do any sector-specific competition regulatory/legal provisions apply (eg, special conditions for dominant telecoms market players)?

The Office of Communications (Ofcom) imposed a number of ex ante rules on operators (especially BT/Openreach and Kingston communications, but also mobile operators and other service providers) following a determination that they have significant market power.

In general, no regulatory provisions apply. However, Ofcom shares responsibility for the regulation of competition-related issues in the communications sector alongside the Competition and Markets Authority. Openreach must provide all of its services on an ‘equivalence of input’ basis, which means that it must generally provide such products and services to each communications provider (including BT) at the same price, using the same processes and according to the same timescales.


Are there any requirements for structural, functional or accounting separation of operators’ activities?

As part of their significant market power obligations, certain communications providers (eg, BT) are subject to accounting separation requirements. BT further provided undertakings to Ofcom agreeing to establish Openreach as a separate functioning entity, for the purpose of operating its local access network.



What rules and procedures govern spectrum allocation?

The International Telecommunications Union governs the use of spectrums on an international basis by means of its International Radio Regulations. The European Commission's Radio Spectrum Policy Programme further sets out policy objectives for EU member states to achieve when carrying out their individual spectrum regimes.

Spectrum is typically allocated by means of auction. The Office of Communications (Ofcom) issues a notice specifying details of the sale process, such as the spectrum to be auctioned, together with the auction rules and licence terms. Other spectrum portions may also be managed by government departments.


What fees apply to spectrum allocation/authorisation?

Ofcom sets out initial fees which vary according to the spectrum frequency being sold. Typically the fees are then updated on an annual basis.  


Can spectrum licences be transferred, traded or sub-licensed?

Depending on the nature of and terms governing the spectrum licence, it may be traded or leased to a third party. Spectrum trading is governed by the Wireless Telegraphy Act 2006 and the Communications Act 2003. Under the Wireless Telegraphy (Spectrum Trading) Regulations 2012, Ofcom’s consent is no longer required for the majority of spectrum transfers. Certain network licences still require Ofcom’s approval.

Voice over Internet Protocol


How is Voice over Internet Protocol (VoIP) regulated in your jurisdiction?

Voice over Internet Protocol (VoIP) is generally regulated by the General Conditions of Entitlement under the Communications Act 2003, although no express provisions apply at present. The Office of Communications sought to address this in its consultation with industry stakeholders in August 2016.

Telephone numbers


How are telephone numbers allocated in your jurisdiction?

Under the Communications Act 2003, the Office of Communications must publish a National Telephone Numbering Plan. The plan includes details regarding:

  • the numbers available;
  • restrictions on the use of the numbers; and
  • consumer protection requirements.

The number ranges are allocated to communications providers, which then allocate individual numbers to consumers. Number ranges are distinguished by specific use. For example, 01 and 02 numbers are used for geographic purposes, while 04 and 06 numbers are reserved for future use.

Number portability

What rules govern telephone number portability?

Under Condition 18 of the General Conditions of Entitlement of the Communications Act 2003, the following rules apply:

  • communications providers must allow end users to choose alternative providers; and
  • mobile operators must provide end users with a Porting Authorisation Code immediately on request over the phone or within a maximum of two hours by text message.

Privacy and data security

Net neutrality

What is your jurisdiction’s regulatory stance on net neutrality?

Net neutrality in the United Kingdom is governed by EU Regulation 2015/2120 on open internet access. The regulation grants end users the right to:

  • access and distribute information and content;
  • use and provide applications and services; and
  • use the terminal equipment of their choice – irrespective of the end user's or provider's location or the location, origin or destination of the information, content, application or service – via their internet access service.


Are there regulations or restrictions on encryption of communications?

Under the Regulation of Investigatory Powers Act 2000, the secretary of state has the power to:

  • serve a notice;
  • require the disclosure of protected information in an intelligible form;
  • require the disclosure of the means to access protected information; and
  • require the disclosure of the means of putting protected information into an intelligible form.

A notice may be served only in specified circumstances – such as where it is necessary for national security or safeguarding the economic wellbeing of the United Kingdom.

Similarly, under the Investigatory Powers Act 2016, the secretary of state may issue a warrant for the removal by a person of electronic protection (ie, encryption) applied by or on behalf of that person to any communications or data.

Data retention

Are telecoms operators bound by any rules or requirements on the retention of consumer communications data? If so, for how long must data be retained?

Pursuant to the Investigatory Powers Act 2016, the secretary of state may require communications providers to retain consumer communication data. Reasons for retaining such data include:

  • public safety;
  • preventing death or injury;
  • national security interests; and
  • protecting public health.

Data must not be retained for more than 12 months.

Government interception/retention

What rules and procedures govern the authorities’ interception of communications and access to consumer communications data?

The interception of communications is governed by the Regulation of Investigatory Powers Act. The act prohibits the interception of communications over public and private telecoms systems, except interceptions made by the controller of the system or with the controller’s consent. The secretary of state may authorise interception in specific circumstances, such as where it is necessary for national security.

In addition, under the Investigatory Powers Act 2016, the secretary of state may issue a targeted interception or bulk interception warrant.

Data security obligations

What are telecoms operators’ general data security obligations to consumers?

The Data Protection Act 1998 sets out the relevant obligations for telecoms operators when handling a person’s personal data. Any such processing must be undertaken by a data controller in accordance with the eight data protection principles set out in the act. The EU General Data Protection Regulation is set to replace the EU Data Protection Directive (from which the Data Protection Act derives) as of May 2018.